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we tell it like it is. Conference on Mining’s Impact on Philippine Economy and Ecology. March 2, 2012 (Friday) Grand Ballroom, Inter-Continental Manila. Peter Wallace Chairman The Wallace Business Forum. A CV MASTER OF SCIENCE, CONSERVATION UNIVERSITY COLLEGE LONDON

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Conference on mining s impact on philippine economy and ecology

we tell it like it is

Conference on Mining’s Impact on Philippine Economy and Ecology

March 2, 2012 (Friday)Grand Ballroom, Inter-Continental Manila

Peter WallaceChairman The Wallace Business Forum


Conference on mining s impact on philippine economy and ecology

A CV

MASTER OF SCIENCE, CONSERVATION UNIVERSITY COLLEGE LONDON

BACHELOR OF SCIENCE, MAJOR IN BIOLOGY AND ECOLOGY, AND HONORS IN ZOOLOGYUNIVERSITY OF NSW, AUSTRALIA

INTERNATIONAL BACCALAUREATE DIPLOMA INTERNATIONAL SCHOOL MANILA

UNDERTAKEN ENVIRONMENTAL IMPACT ASSESSMENTS FOR INFRASTRUCTURE PROJECTS FOR GOVERNMENT AND THE PRIVATE SECTOR

AUTHORED A STUDY TO MINIMIZE IMPACT OF ROAD THROUGH WETLANDS AND MANGROVES, AND EFFECT ON MIGRATORY BIRD SPECIES, AND SIMILAR PROJECTS

  • AS A VOLUNTEER

  • PLANTED TREES

  • WORKED ON LAND REGENERATION

  • TAUGHT UNDERPRIVILEGED KIDS

  • PROJECT TO PROTECT SMALL ANIMALS

  • COMMUNITY SERVICE IN LA CARLOTA

  • ALL BY AGE 28


Conference on mining s impact on philippine economy and ecology

Mining is Unavoidable

This IS a fundamental point that cannot be ignored –

and must be taken into account:

OUR DAILY LIVES ARE DEPENDENT ON MINED PRODUCTS.

Banning mining would take us back

to Neanderthal times.

IT WOULD ALSO OPEN THE DOOR TO ILLEGAL MINING.

It is un-Christian and selfish in the extreme to say

“LET SOMEONE ELSE DO IT”.


Conference on mining s impact on philippine economy and ecology

  • dr. jose rizal saiD:

  • “Very probably the Philippines will defend with indescribable ardor the liberty she has bought at the cost of so much blood and sacrifice. With the new men that will spring from her bosom and their remembrance of the past , she will perhaps enter openly the road of progress with which a young man returns to cultivate his father’s farmland so long devastated and abandoned due to the negligence of those who have alienated it.

  • Then the mines – gold, iron, copper, lead, coal and other minerals – will be worked again and will help solve the problems of poverty.”


Conference on mining s impact on philippine economy and ecology

  • And even the bible in Deuteronomy Chapter 8 Verses 7-9:

  • “For the Lord your God is bringing you into a good land—a land with brooks, streams, and deep springs gushing out into the Valleys and hills; a land with wheat and barley, vines and fig trees, pomegranates, olive oil and honey; a land where bread will not be scarce and you will lack nothing; a land where the rocks are iron and

    • you can dig copper out of the hills.”

  • I’M PRO-ENVIRONMENT.

  • I FOUNDED A FOUNDATION FOR WATERSHED PROTECTION.

  • MY DAUGHTER IS AN ENVIRONMENTAL SCIENTIST.

  • BUT I MUST HAVE MINERALS IN MY LIFE.


Conference on mining s impact on philippine economy and ecology

…Mining is Unavoidable

  • The answer is to control mining –

  • to do the least possible damage

  • to support the local community

  • to rehabilitate the land at the end of the life of the mine

  • The role of everyone should be

  • to ensure those 3 things are done.

  • The solution is:

  •  Responsible MINING NOT BAN MINING.


Mining in our daily lives

Mining in our daily lives


Conference on mining s impact on philippine economy and ecology

  • Mining in our daily lives

Farming and Fishing need Mining


Conference on mining s impact on philippine economy and ecology

  • Mining in our daily lives

 Radio: copper, gold, iron, petroleum

Toaster: copper, iron, nickel, mica, chromium, petroleum

 Electrical Wiring: copper, aluminum, petroleum

 Microwave: copper, gold, iron, silica

 Stove: aluminum, copper, iron, nickel, silica Refrigerator: aluminum, copper, iron, nickel, petroleum, zinc

 Salt: halite

 Plates: clay, silica, feldspar

 Cutlery: iron, nickel, silver, chromium

 Clock: iron, nickel, petroleum, silica

⑪Sink: iron, nickel


Mining in our daily lives1

Mining in our daily lives

  •  Computer: gold, silica, nickel, aluminum, zinc, iron, petroleum

  • Pencil: graphite, clay

  •  Telephone: copper, gold, petroleum

  •  Books: limestone, clay

  •  Pens: limestone, mica, petroleum, clay, silica, talc

  •  Film: petroleum, silver

  • Camera: silica, zinc, copper, aluminum, petroleum

  •  Chair: aluminum, petroleum

  • Television: aluminum, copper, nickel, silica, strontium

 Stereo: gold, iron, nickel, beryllium, petroleum

⑪CD: aluminum, petroleum

⑫Chest: iron, nickel,

copper, zinc

⑬Floor: limestone

⑭Wall: gypsum, clay, mica


Conference on mining s impact on philippine economy and ecology

Mining in our daily lives

An average car uses these metals

2200 lbs. of iron & steel

240 lbs. of aluminum

50 lbs. of carbon

42 lbs. of copper

41 lbs. of silicon

22 lbs. of zinc

405 lbs. of 30 other minerals including titanium, platinum, and gold


Conference on mining s impact on philippine economy and ecology

Mining in our daily lives

Your tricycle can’t run without these metals

iron, copper, nickel, lead, zinc, aluminum, manganese, chromium, vanadium, tungsten, platinum, gold, silver


Conference on mining s impact on philippine economy and ecology

Mining in our daily lives

Your TV works because of these metals

IRON: electronics, screws, brackets

LEAD & TIN:

circuit boards

ALUMINUM:

brackets, heat sinks

COPPER:

circuit boards, wires

GOLD:

Integrated circuits


Conference on mining s impact on philippine economy and ecology

Mining in our daily lives

An average cellphone contains

2% silver, gold, palladium, platinum

58% plastics

made of petroleum

16% ceramics made of silica

24% copper


Conference on mining s impact on philippine economy and ecology

  • Mining in our daily lives

  • WE NEED A METAL SEWING MACHINE

  • WE NEED A METAL CLOTH PRODUCTION MACHINE

  • WEAVING ON A WOODEN WEAVE IS OK IF THERE ARE 100-M PEOPLE IN THE WORLD


Conference on mining s impact on philippine economy and ecology

  • Mining in our daily lives

The Church uses products of Mining

So we must have mining in our lives


Conference on mining s impact on philippine economy and ecology

OVER THE PAST 20 YEARS THE PHILIPPINES HAS BEEN THE POOREST PERFORMER

PERFORMANCE IN ASEAN

ESTIMATED PROPORTION OF POPULATION LIVING BELOW $1.25/DAY (IN PPP)

Philippines

WE HARDLY MADE A DENT ON POVERTY UNLIKE OUR NEIGHBORS

2.3 MILLION FAMILIES ALREADY ON CCT BECAUSE THERE ARE NO JOBS

INDONESIA EMPLOYS 1.5M IN MINES

THE PHILIPPINES ONLY 340,000


Conference on mining s impact on philippine economy and ecology

THE PHILIPPINES RANKS HIGH IN THE WORLD

ON MINERAL RESOURCES RESERVES

INVESTMENTS FROM 2011-2017 PROJECTED TO REACH $15-B

WILL HAVE 3% SHARE TO GDP BY 2018

MINING CAN PROVIDE THE BOOST THE ECONOMY NEEDS

TOTAL REVENUES $43-B, 3% OF GDP BY 2018


Conference on mining s impact on philippine economy and ecology

SHARE OF MINERAL EXPORTS TO TOTAL ANNUAL EXPORTS (%)

Peru

Chile

Brazil

S. Africa

Vietnam

India

Philippines


Conference on mining s impact on philippine economy and ecology

OVER THE NEXT 5 YEARS WE EXPECT

THE PHILIPPINE ECONOMY TO GROW AT AN AVERAGE OF 5.5%

GDP GROWTH FOR THE PAST 25 YRS

GOV’T CAN EASILY RAISE GDP GROWTH TO AT LEAST 6.5% P.A. BY SPENDING MORE ON INFRA AND SUSTAINING THE ANTI-CORRUPTION STANCE.

THAT’S ASSUMING EVERYTHING CONTINUES ON THE CURRENT TRACK.

BUT MINING CAN BE A GAME-CHANGER.

TAMPAKAN ALONE CAN ADD 1% AGE POINT TO GDP GROWTH


Conference on mining s impact on philippine economy and ecology

WE CAN LOOK AT 2 SCENARIOS

AWAITING THE MINING SECTOR:

SCENARIO 1

MINING GETS FULL GOVERNMENT SUPPORT AND FAST ACTION ON APPROVALS ETC.

WHILE THE OPPOSITION REALIZES THEIR ROLE IS TO HELP CONTROL, NOT BLOCK MINING.

INVESTORS PUT REAL MONEY IN


Conference on mining s impact on philippine economy and ecology

THEN WHAT HAPPENS?

SUSTAINABLE, WORLD’S BEST PRACTICE MINING – UNDER CLOSE MONITORING OF FORMIDABLE WATCHDOGS

AT LEAST 112,000 MORE DIRECT JOBS FROM $15-B INVESTMENTS: JOBS THAT PAY WELL, GET WORKERS’ KIDS TO SCHOOL, & ENSURES WORKERS’ FAMILIES DON’T GO HUNGRY

ROADS, SCHOOLS & HOSPITALS BUILT IN REMOTE AREAS

ELECTRICITY AND WATER COME TO THE VILLAGE

GDP GROWS AT 7-8% P.A., NOT 5.5%

WE BREAK THE POVERTY TRAP


Conference on mining s impact on philippine economy and ecology

SCENARIO 2

GOVERNMENT CONTINUES TO DILLYDALLY & FLIP FLOP

OPPOSITION SUCCEEDS IN BLOCKING DEVELOPMENT

THE OPEN PIT BAN STAYS, EVEN EXPANDS

INVESTORS LEAVE

THEN WHAT HAPPENS?

INFORMAL, SMALL-SCALE MINING TAKES OVER

DISASTERS CONTINUE AND MINING COMMUNITIES REMAIN POVERTY-STRICKEN

JOBS AREN’T CREATED, SUPPORT SERVICES DON’T HAPPEN

ECONOMY SUFFERS, GDP TRICKLES ALONG AT 3.5-4%


Conference on mining s impact on philippine economy and ecology

  • WHY IS RESPONSIBLE MINING BENEFICIAL?

  • CONTRIBUTES TO GROWTH OF LOCAL AND NATIONAL ECONOMY

  • Investing capital and re-investing profit in the country

  • Revenue generation through taxes

  • Utilization of local goods and services

  • Additional employment in rural areas

  • Improvement of infrastructure (roads, power and water systems, buildings)


Conference on mining s impact on philippine economy and ecology

  • 2. IMPROVES THE QUALITY OF LIFE ESPECIALLY IN RURAL AREAS

  • Provides infrastructure for community dev’t (roads, housing)

  • Provides access to hospitals and other healthcare facilities

  • Brings in quality education in remote areas

  • Implements social management and dev’t programs


Conference on mining s impact on philippine economy and ecology

  • 3. SUPPORTS THE ENVIRONMENT

  • Implements best and sustainable environmental practices in mining

  • Carries out progressive mine rehabilitation

  • Builds structures that prevent disasters and environmental degradation

  • Fully rehabilitates the area at the mine’s end

  • IT’S SMALL SCALE THAT DOESN’T DO ANY OF THIS


Conference on mining s impact on philippine economy and ecology

THE PHILIPPINES HAS THE LOWESTLEVEL OF PERSONAL WEALTH

MINING CONTRIBUTION TO GDP (%)

Indonesia

MINING IS NOT THE ONLY REASON, BUT IT’S CERTAINLY A MAJOR REASON.

Vietnam

Philippines


Conference on mining s impact on philippine economy and ecology

MINING WEALTH OF THE COUNTRY IS ESTIMATED TO BE AT $840 BILLION OR P47 TRILLION (4 TIMES THE ANNUAL GDP)

BUT THE PHILIPPINES ACCOUNTS FOR LESS THAN 3% OF WORLD MINERAL SUPPLY DESPITE BEING RICHLY ENDOWED WITH RESOURCES.

SAUDI ARABIA IS RICH BECAUSE IT HAS OIL AND PUMPS IT OUT OF THE GROUND TO SELL IT.

THE PHILIPPINES IS POOR BECAUSE IT HAS GOLD IN THE GROUND – AND LEAVES IT THERE.


Conference on mining s impact on philippine economy and ecology

THE CONTRIBUTION OF MINING TO THE ECONOMY CAN’T BE DENIED

PERCENT SHARE OF MINING TO TOTAL EXPORTS SINCE 1975

IN THE 1970’S, MINERAL EXPORTS PEAKED &

CONTRIBUTED 24% TO TOTAL EXPORTS.

MINERAL EXPORTS IN 2011 AMOUNTED TO A MERE $2 BILLION

IT’S A MERE 5% OF EXPORTS TODAY.

IF IT HAD CONTINUED AT 20%, IT WOULD HAVE BEEN $9-B


Conference on mining s impact on philippine economy and ecology

EMPLOYMENT IN MINING AND QUARRYING (IN THOUSANDS)

JUST FOR THE 1ST 3Q OF 2011, LARGE-SCALE METALLIC MINING EMPLOYED 220,000

TOTAL EMPLOYMENT IN METALLIC AND NON-METALLIC MINING IS AROUND 340,000.

THEN ADD TO THAT ALL THE EMPLOYEES OF SUPPORT SERVICES AND SUPPLIERS, PROBABLY RUNS TO ≈2 MILLION


Conference on mining s impact on philippine economy and ecology

MINING EMPLOYS 220,000 ON 60,000 HAS. = 0.2% LAND MASS

AGRICULTURE EMPLOYS 12M ON 9.6M HAS. = 32% LAND MASS

ON A PER HECTARE BASIS:

MINING EMPLOYS 4 PERSONS/HA. WHILE

AGRICULTURE EMPLOYS 1 PERSON/HA.

AVE. MINING WAGE (rank and file)* : P550/day = P2,200/ha.

VS.

AVERAGE FARMER INCOME**: P260/day = P260/ha.

PEOPLE-WISE WHICH IS THE BETTER LAND USE?

*data from a responsible mining firm

**from National Wages and Productivity Commission; ave. among regions


Conference on mining s impact on philippine economy and ecology

10 Largest Rice Producers

in the Philippines (in tons):

Nueva Ecija - 1, 356, 161

Isabela - 1, 036, 917

Pangasinan - 1, 011, 115

Iloilo - 823, 376

Cagayan - 702, 561

Leyte - 582, 890

Camarines Sur - 560, 889

Tarlac - 557, 943

North Cotabato - 449, 202

Maguindanao - 433, 766

No Operating Mines are located in these Provinces!

Operating Mines

Major

Rice Producers


Conference on mining s impact on philippine economy and ecology

  • A TYPICAL MPSA COMPANY OR PROJECT ALREADY CONTRIBUTES ABOUT 43.7% OF ITS REVENUES TO THE PUBLIC SECTOR

  • AND WITH ROYALTIES, IT CAN GO AS HIGH AS 52.8%

  • ASIDE FROM TAXES, THE PUBLIC SECTOR ALSO BENEFITS FROM OTHER FORMS OF CONTRIBUTIONS OF RESPONSIBLE MINING COMPANIES TO THE ECONOMY


Conference on mining s impact on philippine economy and ecology

FOR EXAMPLE:

THE MUNICIPALITY OF SIOCON HAS GONE FROM CLASS 4 TO CLASS 1


Conference on mining s impact on philippine economy and ecology

TOTAL TAX RATE BY REGION

TOTAL TAXES AS % NET INCOME

FURTHER RAISING TAX RATES WILL RENDER THE COUNTRY EVEN LESS COMPETITIVE THAN IT IS NOW

Data for Philippines are based on an actual MPSA company

Source: Data on OECD, Africa & Latin America were sourced from PWC Global Study on Total Tax Contribution of Mining


Conference on mining s impact on philippine economy and ecology

PH VS. INDONESIA (MINING TAXES)

Notes:

1. Assumes publicly listed company; royalty rates following approval of Regulation No. 9, 2012.

2. Royalty is applicable to Nickel Ore; Nickel Matte is taxed at 4%.

3. Based on Gross Output.

4. Royalty in the case of Indonesia.

5. Assumes municipalities charge at the maximum allowable rate of 70% of 2% as per Sec. 143 (h) of the Local Gov't Code; the 30% balance is charged at the rate applicable in Makati.


Conference on mining s impact on philippine economy and ecology

THE TAMPAKAN PROJECT

  • ONE OF THE LARGEST UNDERDEVELOPED COPPER-GOLD PROJECTS IN THE WORLD

  • A $5.9 BILLION INVESTMENT – LARGEST EVER FDI

  • WE ONLY ATTRACTED ABOUT $1.7 BILLION IN 2010 AND UNDER $1-B LAST YEAR!

OVER 5 YEARS IT WOULD PAY:

P250B IN NATIONAL TAXES P95B IN LOCAL TAXES

IT WOULD ADD 10.4% TO RGDP

OVER 20-YEAR LIFE, PAY $7.2-B TO GOVERNMENT

=P15 BILION PER YEAR


Conference on mining s impact on philippine economy and ecology

THE TAMPAKAN PROJECT

  • REGIONAL INCOME WILL INCREASE FROM ADDITIONAL EMPLOYMENT

  • ABOUT 10,000 JOBS DURING PEAK OF CONSTRUCTION PHASE

  • AND 2,000 JOBS DURING OPERATIONS PHASE

  • BETWEEN 12% AND 130% INCREASE IN AVERAGE PER CAPITA INCOME IN HOST VILLAGES

  • UP TO P250-M P.A. IN HOST VILLAGES

  • UP TO P120-M IN OTHER VILLAGES IN HOST MUNICIPALITIES

  • UP TO P265-M IN OTHER MUNICIPALITIES IN HOST PROVINCES

  • Source: David Pearce

  • Centre for International Economics


Conference on mining s impact on philippine economy and ecology

IN THE FRASER INSTITUTE ANNUAL SURVEY OF MINING COMPANIES, PHILIPPINES IS IN THE BOTTOM 10

HOWEVER THE COUNTRY WOULD PLACE 7TH – FROM THE TOP – ASSUMING A “BEST PRACTICES” POLICY REGIME

THUS, INVESTMENTS WOULD COME IN IF

THE GOV’T ADOPTED MARKET-ENABLING POLICIES


Conference on mining s impact on philippine economy and ecology

  • AGAIN, THE SOLUTION:

  • RESPONSIBLE MINING, NOT BAN MINING.

  • WHAT IS NEEDED IS REGULATORY CHANGES THAT WILL ADDRESS THE REAL PROBLEMS IN THE INDUSTRY.

  • AND EFFECTIVE IMPLEMENTATION OF THEM.

  • PUT SMALL SCALE MINING UNDER NATIONAL CONTROL.

  • ENSURE THEY ACT RESPONSIBLY SO AS TO MINIMIZE HARM TO THE ENVIRONMENT

  • STOP THEIR USE OF MERCURY

  • REQUIRE THEM TO PAY TAXES

  • SELL THEIR GOLD TO THE BSP – AS MANDATED

  • STOP ILLEGAL EXPORT


Conference on mining s impact on philippine economy and ecology

2. STRENGTHEN THE CAPABILITY OF DENR AND MGB TO PROPERLY AND FULLY MANAGE MINERALS DEV’T – BY BOTH SMALL AND LARGE-SCALE MINES. AND FUND IT ADEQUATELY.

3. LOCAL LAWS CANNOT BE ALLOWED TO OVERRULE NATIONAL LAW. ANY BAN OR CONTROL IN A PARTICULAR AREA MUST COME FROM THE NATIONAL GOV’T AND BE IN LINE WITH NATIONAL LAW.

4. SHARE OF REVENUES TO GOV’T MUST BE FAIR. BUT MUST KEEP THE COUNTRY COMPETITIVE WITH OTHERS TO MAINTAIN INVESTOR CONFIDENCE & INTEREST.


Conference on mining s impact on philippine economy and ecology

5. ANY CHANGE CANNOT BE RETRO-ACTIVE, AND MUST RESPECT INTERNATIONAL TREATIES. GRANTED AGREEMENTS MUST BE HONORED.

6. THE ENVIRONMENT MUST BE PROTECTED – BUT IN A REALISTIC FASHION. MINES MUST PROGRESSIVELY RESTORE THE LAND AND DO A FULL REHABILITATION AT THE END OF THE MINE’S LIFE. RESPONSIBLE COMPANIES WILL.


Conference on mining s impact on philippine economy and ecology

Mining is Unavoidable

This is a fundamental point that cannot be ignored –

and must be taken into account:

OUR DAILY LIVES ARE DEPENDENT ON MINED PRODUCTS.

SO WE HAVE TO CONTROL, NOT BAN.

LET US WORK TOGETHER ON CONTROL.

THANK YOU.


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