Philippines to review all mines as environmentalist takes the helm

by Reuters
Friday, 1 July 2016 07:53 GMT

A small-scale child miner rests on sacks containing iron ore mixed in black sand gathered at the river in San Marcelino, north of Manila, Philippines, Feb. 4, 2013. REUTERS/Erik De Castro

Image Caption and Rights Information
"I do want to evaluate if the country is safe from mining," says new minister

By Manolo Serapio Jr and Enrico Dela Cruz

MANILA, July 1 (Reuters) - The Philippines will review all mines operating in the country, the new mining minister said on Friday, as the committed environmentalist vowed to determine whether the industry is hurting the Southeast Asian nation.

Regina Lopez's appointment to head the Department of Environment and Natural Resources, has sent shockwaves through the mining sector, which fears a nationwide crackdown.

"I'm not against the mining industry but I'm against suffering," Lopez told reporters on her first day in office as part of the administration of Rodrigo Duterte.

"I do want to evaluate if the country is safe from mining," she told a briefing where videos were aired showing environmental harm from mining along with testimonies from farmers and fishermen opposed to the industry.

The minister said the review would take a month.

Her stance suggests a tough regulatory road ahead for Philippine miners, whose nickel ore producers are the biggest suppliers to China.

President Duterte has warned that he could cancel projects causing environmental harm, though he told business leaders last week that he was not against mining per se. 

The country's mining sector, one of the world's largest in the 1970s, has since struggled partly due to environmental rules and policy flip flops, missing much of the mining boom in recent decades and now facing much lower commodity prices.

Lopez has described as "madness" even to consider open pit mining - a method used by many miners in the Philippines and elsewhere - because of the environmental impact. 

The minister declined to say on Friday whether she would ban it, but said the industry "has to shift its method of operations."

The Philippines has suffered a number of environmental disasters caused by mining, including a 1996 tailings leak at Canadian-owned Marcopper Mining Corp's copper mine in Marinduque that contaminated rivers.

RISK OF POLICIES BACKFIRING?

Ramon Adviento, senior vice president at Global Ferronickel Holdings Inc FNI.PS, the Philippines' second-biggest nickel ore miner, said the industry was "shell shocked" by Lopez' appointment though he didn't think it meant the death of mining.

But miners say hardline policies could backfire particularly as the Philippines has become the biggest nickel ore supplier to China after previous top exporter Indonesia banned shipments of unprocessed minerals in 2014, shipping 34.3 million tonnes last year.

Mining contributes less than 1 percent to the Philippine economy. Of 9 million hectares identified by the government as having high mineral reserves, only 3 percent is being mined.

"Duterte wants hard investments and new projects invest billions of dollars... and these are done in far-flung areas which goes with the president's call for rural development," said Nelia Halcon from the Chamber of Mines of the Philippines.

The challenge is how to lure back foreign investors.

Mining investment shrank to a three-year low in 2015 below $1 billion, after President Benigno Aquino, Duterte's predecessor, banned new mining development permits during his term and sought to increase the state's revenue share from mines.

Commodities giant Glencore Plc last year quit the $5.9 billion gold-copper Tampakan project in the southern Mindanao island, that has failed to take off after the province where Tampakan is located banned open-pit mining in 2010.

There are only a handful of foreign investors involved in mining currently, including Australia's Oceanagold Corp and Canada's B2Gold.

It's going to take some time to reassure foreign investors, which have the capital and technology, that "the risk is not too high," said business consultant Peter Wallace.

(Editing by Ed Davies)

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