THE alarm with which the mineral sector has received the news of the appointment of the apoplectically anti-mining Gina Lopez as head of the Department of Environment and Natural Resources (DENR) was quantified in a report released this week by the Chamber of Mines of the Philippines (COMP). The report summarized the potential loss from what would be a worst-case scenario for the industry under the new Duterte government, a virtual halt to any mining activities in the country: a total of about $30 billion over the next five to 10 years in lost investment and foregone revenue.
Rather than speculate on what Lopez or her new boss intends to do with the mining sector—since neither has offered any real hints of policy direction, other than to indicate that they will view the issue very critically—it is perhaps worthwhile to review exactly how this part of the economy was thrown into turmoil. The blame for it falls squarely at the feet of the now-former President BS Aquin o 3rd, who with typical arbitrary cluelessness undid two decades of struggle to develop and implement what was considered one of the world’s model mining policies with a stroke of a pen, or in his case, maybe a crayon.
In the latter part of 2011, Aquino announced his intention to issue an Executive Order that would restructure the country’s mining law, boost the government’s share of mineral revenue, and clear up some points of contention regarding environmental management and regulation of the so-called “small scale” mining sector. Never mind that the Mining Act of 1995, which took years of legislative work to craft and then was held in limbo by legal challenges for a decade before being declared constitutional, had only been in force for about six years; the petulant former legislator who had never passed a bill into law or even independently introduced one decided that the Act was flawed, and needed to be changed.
In early 2012, a draft of the proposed EO (later to become EO 79) was leaked, and immediately drew this reaction from a dumbfounded Joint Foreign Chambers:
“The draft EO, as presented, is profoundly disturbing in that it creates great uncertainty for established and potential investors in the Philippines. It proposes to review all existing contracts, and renegotiate or impose an increased government tax or royalty share, and potentially closes out granted contracts completely.
“It also unnecessarily damages sovereign credibility on the global stage, and in some cases violates the Foreign Investment Protection Agreements [FIPAs] signed by the Philippines with many countries. Such uncertainty would have a major and lasting impact on the Philippines’ ability to attract responsible investors—particularly as it would come at a time when global and regional competition to attract foreign investment is so competitive.”
Philippine Star columnist Alex Magno, in a column on February 9 that year, pointed out that arbitrarily abolishing a legislative act by executive fiat was, if not illegal, at least ill-advised:
“Many of the major investors in the mining industry, bringing in billions of dollars in actual investments, came in after 2005. That was the year the Supreme Court upheld the constitutionality of the 1995 Mining Act. The application of this forward-looking law was delayed for a whole decade because of legal obstacles set up by the anti-mining groups.
“After the constitutionality of the Mining Act was upheld, investors presumed the policy framework for this extractive industry was defined. The law is the policy.
The Mining Act is not a bad law either. It took many years to push this law through the legislative grind. The final product, although subjected to questions of constitutionality, has been pronounced the best mining law there is. Other countries looked to emulating our Mining Act.
“The Act was crafted to reconcile a wide field of considerations. The Act recognized the great economic potential mining holds, the social development of marginal communities it could foster and the employment opportunities it will create. At the same time, the Act made sure the economic potential will be realized without harming the environment. It includes stringent provisions requiring best practices to guard against environmental hazards, a plan for remediation of the mining areas, and assurance the host communities will economically benefit from the industry.
Because the Mining Act was law, it was taken as a guarantee of a stable and predictable policy framework. What else, after all, could be more certain than law?”
What seemed to have happened was that to craft the new EO Aquino had selected—or was pressured into selecting—a Mining Policy Group that excluded anyone with an actual stake in the mining industry, the group being composed of then-DENR Secretary Ramon Paje, the Presidential Adviser on Climate Change, the chair of the Climate Change Commission, then-Presidential Adviser on Environmental Protection Neric Acosta (who has since been convicted by the Sandiganbayan on an unrelated graft charge).
EO 79 finally became official at the beginning of July 2012, but since it needs legislation to make it operative, the mining sector has been in a sort of limbo since then, meaning that the main task of the new Duterte Administration as far as the mining sector is concerned will be to clear up the confusion left behind by its predecessor. Lopez, in her new capacity as DENR head, has implied that the simplest solution, which would be for Duterte to rescind EO 79 and let the original Mining Act stay in force until new legislation could be developed, would not be acceptable and that she would be looking for quicker action on mining regulation. Thus, the presumption at this point is that the Duterte Administration will have to start from scratch.
Given that the original Mining Act of 1995 took nearly 20 years from conception to actual implementation, the dire scenario presented by COMP might actually be optimistic, and the stark choice presented by Lopez—mining or the environment—might unintentionally be a description of practical reality. It wouldn’t be, if Aquino had left well enough alone.