2003 LEGACY MINES VISIT

MANILA MINING CORPORATION IN THE MINING DISTRICT:

STRUGGLING WITH CORPORATE SOCIAL RESPONSIBILITY AT THE LOCAL

Philippine Working Group on Mining

Environmental Science for Social Change March 2008

TABLE OF CONTENTS

THE SURIGAO DEL NORTE MINING DISTRICT ...... 3 CONSTRUCTIVE ENGAGEMENT AMONG MINING STAKEHOLDERS .... 3 The Multipartite Monitoring Team and Mine Rehabilitation Fund Committee ...... 3 The Community Technical Working Group ...... 4 MINING CORPORATION IN PLACER, SURIGAO DEL NORTE.. 4 MMC OPERATION IN PLACER: ENVIRONMENTAL DISASTERS AND CONFLICTS WITH STAKEHOLDERS ...... 5 Tailings Pond No. 5 collapse ...... 5 Tailings Pond No. 7 failure...... 6 MMC AND MMT/MRFC CONFLICT OVER TP 7...... 6 Landslide in Heine Pit...... 9 Social acceptability issues on MMC’s exploration permit in Anislagan and Malakaya...... 9 MMC MINE SITE IN PLACER: PRESENT SITUATION AND FUTURE PLANS...... 12 MMC’s unclear plans for Placer mine...... 12 LGU proposal to open site to small scale mining ...... 12 MMC’s on-going consultations in Anislagan and exploration in Malakaya ...... 12 MMC MINING ISSUES: QUESTIONS AND CHALLENGES...... 13 Effectiveness of the multipartite monitoring...... 13 Tracking MMC’s record in mining and impelling corporate social responsibility and accountability...... 14 Mining governance issues...... 15 REFERENCES...... 17 ENDNOTES ...... 18

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 2 March 2008

THE SURIGAO DEL NORTE MINING DISTRICT

Surigao del Norte is a mineral-rich province, and its economy is closely tied with the exploitation of its mineral resources. With its metallic and non-metallic resources, the entire Surigao del Norte province was declared a Mineral Reservation Area under Presidential Proclamation No. 391 in the 1930s. The province has large reserves of metals that include aluminum, chromite, copper, cobalt, gold, iron, lead, manganese, nickel, silver and zinc. Non-metallic resources, on the other hand, include deposits of limestone, coal and aggregate construction materials. The current, redefined mining reserve in Surigao del Norte covers 20,000 hectares of the province’s mainland and 5,063 hectares in Dinagat Island. The economy of many towns in the province, which has a total land area of 273,902 hectares, relies heavily on mining.

The province’s vast mineral reserves are evinced in the long history of mining and high concentration of mining activities and interests in the area (Figure 1). At present, active large scale mining operations include nickel mining by Philnico Processing Corporation/Hinatuan Mining Company and Cagdianao Mining Corporation in Dinagat Island, Taganito Mining Corporation in Claver, and limestone quarrying by Pacific Cement Company in Sison. Mines that are opening soon include those of Claver Mining Development Corporation and Case Mining Corporation in Claver, and another mine of Philnico Processing Corporation in Dinagat. There are also five exploration activities undertaken by different companies. Six mines are in temporary operational suspension, one of which is the copper-gold mine of Manila Mining Corporation in Placer.

CONSTRUCTIVE ENGAGEMENT AMONG MINING STAKEHOLDERS

The Multipartite Monitoring Team and Mine Rehabilitation Fund Committee

Constructive local engagement among on-site mining stakeholders (such as the local government units, indigenous peoples, the church, non-government organizations) and regional line agencies involved in mining (specifically the Department of Environment and Natural Resources-Mines and Geosciences Bureau or DENR-MGB) in multi-stakeholder mine monitoring mechanisms provided for under the Philippine Mining Act was first coordinated in Surigao del Norte mining district.

These mechanisms are the Multipartite Monitoring Team (MMT) and the Mine Rehabilitation Fund Committee (MRFC). An MMT is organized for each operational mine and the team conducts quarterly monitoring of the mine to check if its operations comply with environmental regulation and the commitments and conditions specified in its Environmental Compliance Certificate (ECC). The MMT reports its findings to the MRFC, a regional committee that evaluates the monitoring report and makes necessary recommendations. The composition of these monitoring groups is multi-sectoral. Among the companies that formed their MMTs in the province are Manila Mining Corporation, Taganito Mining Corporation, Hinatuan Mining Corporation, Cagdianao Mining Corporation, Krominco (chromite mining) and Pacific Cement Company.

However, the initial gains in making the multipartite monitoring process work in the Surigao del Norte mining district were significantly undermined by a year-long ESSC: 2003 Legacy Mines Visit – Surigao del Norte 3 March 2008

conflict between the MMT of Manila Mining Corporation (MMC) with the regional MRFC, and the MMC in 2000. The Diocese of Surigao del Norte, recognizing the major role mining plays in the local economy, was actively involved in the local MMTs and the regional MRFC until its resignation in December 2000. Disenchanted with the multi-sectoral monitoring process in general because of the groups’ lack of control of the process and the complex politics involved, the diocese also chose not to participate in the Community Technical Working Groups (CTWGs). However, the church continues its critical engagement of mining issues.

The Community Technical Working Group

Another mining dialogue mechanism that is currently productively driving the Surigao del Norte mining district are the Community Technical Working Groups (CTWGs) that monitor different mines within the province. The CTWGs informally parallel the functions of the MMTs and are working actively in their respective areas to ensure responsible mining through fostering communication and partnership among stakeholders. The CTWGs also cover exploration activities of mining companies that are not under the jurisdiction of MMTs. The CTWGs are composed of representatives from mining companies, government, non-governmental organizations, local government units and local community members.

The MGB in Caraga region initiated the formation of the CTWGs to address the complaint of mining stakeholders that the composition of the mandated MMT is very limited. Compared with the MMT, the CTWG has more members that allows for a broad-based, multi-sectoral approach in addressing environmental and social mining issues. The adaption of the CTWG process, which is showing positive outcomes in Surigao del Norte, is now being considered in other provinces of Caraga and other regions. The CTWGs of Surigao del Norte have the support of mining companies in the whole province except the Manila Mining Corporation.

MANILA MINING CORPORATION IN PLACER, SURIGAO DEL NORTE

Placer is a coastal municipality in Surigao del Norte. The town is 34 kilometers southeast of (Figure 1) and is adjacent to the towns of Tubod, Mainit and Tagana-an that were previously three large barangays of Placer. Its population of around 23,000 is spread over 17 barangaysi. Rich in marine and mineral resources, fishing and farming are the people’s main sources of income. Placer is a fourth class municipality with an Internal Revenue Allotment (IRA) of PhP 21 million.

Manila Mining Corporation (MMC) started operating within the former mining claims of the East Mindanao Mining Company (EMMC) in Placer in 1979. The EMMC operated in Placer in the late 1930s, mining gold in the area for a short period in pre-World War II. Prior to the commencement of MMC mining, small-scale mining was a major livelihood for local residents.

Incorporated on 3 June 1949, MMC is an affiliate of the Lepanto Consolidated Mining Company. MMC initially employed underground mining methods for its gold mining activities in Barangay Magsaysay in Placer (Figure 2). In 1982, MMC upgraded its operations from its former 1,500 tonnes per day output to 3,000 tonnes per day with the simultaneous implementation of its open-pit and underground mining ESSC: 2003 Legacy Mines Visit – Surigao del Norte 4 March 2008

projects. In 1997, the company expanded its milling operations to accommodate copper from its gold-copper deposits. MMC was producing gold bullions through a carbon-in-pulp (CIP) plant and copper concentrates from its copper flotation plant until it temporarily put on hold its mining operations in December 2000. In July 2001, the company formally announced its temporary mine closure in Placer.ii Two- thirds of its work force was retrenched as a result of the mine shutdown.

While it was still in operation, the company provided approximately 3,900 jobs to town residents and migrants and generated revenues for the government through taxes. From 1993 to 2000, MMC paid the government a total of PhP 64 million and PhP 160 million in excise and realty taxes respectively. MMC paid approximately PhP 3 million a year to the municipality of Placer in realty taxes before it announced its suspension of operations. As part of its social and educational development programs for the mining affected areas, MMC provided teachers and donated computers and other support to the local school it constructed for Placer residents. The company also built roads and started livelihood projects in keeping with its memorandum of agreement (MOA) with mining stakeholders in Placer.

MMC OPERATION IN PLACER: ENVIRONMENTAL DISASTERS AND CONFLICTS WITH STAKEHOLDERS

The mining history of MMC’s copper-gold mine in Placer is ridden with a number of recorded sporadic waste spill events from 1983 to 2001 that affected the areas downstream of the mine site and Placer Bayiii as well as violations of environmental laws.iv A dam failure on 9 July 1987 resulted in a fishkill in Placer Bay. A leak occurred in 1995 that discharged mine tailings into Placer Bay and caused another fishkill. Recorded violations of environmental policies by MMC include causing pollution and heavy siltation of the coastal area as a result of improper waste disposal in 1994, raising of the elevation of its Tailings Pond 7 without an ECC in 1997, and conducting open pit mining in its Suyoc mine (that caused heavy siltation in Barangays Suyoc and Bugasbugas) in 1998 without an ECC. Multipartite monitoring done in June 1998 to check MMC’s compliance with all the commitments and conditions specified in its ECC found out that the company failed to meet several terms on its ECC.

Tailings Pond No. 5 collapse

On 2 September 1995, MMC’s Tailings Pond No. 5 (TP 5) failed and released approximately one million cubic meters of water and waste materials. Thirteen people died and 14 vehicles were lost as a result.v A fishkill due to waste spillage in Placer Bay was also reported.vi The probable cause for the TP 5 collapse was the scouring of its structural base by wave action at a time when the ESSC-NASSA team checking out the reforested tailings pond was full of waste area near TP 5 in 2003 materials and impounded rainwater ESSC: 2003 Legacy Mines Visit – Surigao del Norte 5 March 2008

brought by a heavy storm. MGB-Caraga ordered the rehabilitation of the tailings pond and imposed a fine of PhP 300,000. MMC rehabilitated and reforested the TP 5 area and compensated the families affected by the collapse of TP 5.

Tailings Pond No. 7 failure

In April 1999, MMC’s Tailings Pond No. 7 (TP 7) failed and discharged around 881, 320 cubic meters of mill tailings. Twenty-two houses and 51 hectares of croplands, coconut or nipa areas and marshlands, including the Batayakan area, were submerged under waste materials. The cause of the tailings release is the failure of TP 7’s decant tower. Shortly after the collapse, MGB ordered MMC to immediately implement specific mitigating measures to prevent the further release of mine tailings to the Placer coast and prevent the increased risk of loss of life and damage to properties and to the environment. However, MMC only complied with the order after 24 hours from receipt of the order, owing to the company’s slow corporate decision making. The 24-hour window for immediate response could have averted further damage or disaster caused by the TP 7 failure. Some groups suspected that the collapse of TP 7’s decant tower was a calculated action aimed at prolonging the operational life of the tailings dam by releasing some of its contents.

MGB later instructed MMC to rehabilitate the tailings pond and institute a five-year rehabilitation program of the Batayakan marshland area affected by the spill. MMC repaired TP 7, fortified the structure’s embankment and constructed additional emergency drainage pathways for TP 7. MMC relocated and evacuated families directly affected by the disaster and extended rice and financial support to affected residents (but there are still complaints on this) of Barangay Magsaysay in Placer. As of April 2002, MMC completed 17% of the Bayatakan Area Rehabilitation Program.

In response to the TP 7 failure, the Diocese of Surigao initiated an environmental study of Placer Bay and the MMC mine site to assess the environmental impact of MMC mining in the area. A team from the University of San Carlos in Cebu City participated in the study that was intended to address, in particular, suspected mercury release in Placer Bay. However, MMC did not permit the study team to enter its premises. Its security guards fired warning shots to warn the environmental assessment team from entering MMC premises. Concerned groups that supported the environmental study suspected that MMC used mercury in its previous operations and that high levels of mercury were incorporated in the materials at the lower portions of the tailings structure. However, it must be noted that as a rule of thumb, mercury is not involved in sequence of metal extraction process in the mill plants of mining companies.

MMC AND MMT/MRFC CONFLICT OVER TP 7vii

Throughout most of 2000, the MMT of Manila Mining Corporation – with the regional MRFC – and local communities led by the Diocese of Surigao del Norte, with support from the local government units, other religious groups and assisting organizations sustained their protest of MMC’s use of TP 7. MMC held an expired permit and application for permit to extend the height of the tailings dam as well as to the decisions of the line agencies to issue said permit to MMC. The yearlong dispute

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 6 March 2008

over TP 7 of the MMC became a test case for the capacity and effectiveness of these monitoring mechanisms.

MMC’s permit to operate TP7 at a 50-meter height expired in January 2000, but MMC continued dumping tailings into the dam. The MMT, during its regular quarterly mine monitoring for MMC’s operation on 15-17 March 2000, found out that the tailings pond was almost full and estimated its remaining life span to be 40 days only. The MMT, through the MRFC (with the MMC representative abstaining), recommended to MGB-Caraga and the Environmental Management Section (EMS)- Caraga to sanction MMC for its continued use of TP 7 on an expired permit and to order MMC to stop dumping wastes into TP 7 upon reaching the 50-meter limit.

MMC simply continued using TP 7. On two subsequent monitoring visits by MGB- Caraga in March, it noted that MMC disregarded MMT recommendations to transfer its drop point. By 1 April, MMT monitoring observed that the dam height at the southern part of the dam already exceeded the 50-meter allowed level. As MMC went on dumping wastes in TP 7, it also applied for permit to raise TP 7 dam by three meters.

In general, the MMT of MMC and the MRFC, the local communities, local government units, the diocese leadership and other groups opposed the extension of TP 7’s embankment height. This is because they feared this will increase the risk of a repeat of the TP 7 dam failure that occurred a year before, notwithstanding MGB’s certification of the integrity of the dam for additional three meters. At risk are residents and a school (which is about 400 meters from the dam) located along the direct path of a strong surge of mine wastes. These local stakeholders demanded that MMC should construct another tailings pond.

On 20 April, EMS-Caraga forwarded to MGB-Caraga its recommendation for MMC to stop using TP 7 based on the findings of the MMT and opposition to the continued use of TP 7. When MGB-Caraga personnel tried to serve this order and its reports of operational violations to MMC on 20 and 21 April, they were denied entry twice by MMC guards for the reason that there was no authorized staff to receive the order. After MGB-Caraga referred the matter to MGB-Central Office for appropriate action, the order was finally served on 22 April.

Panoramic view taken in 2003 of the site of conflict between MMC and local stakeholders throughout 2000: Tailings Pond 7 (left), its embankment, which appears like a road (center), and the Placer town (right)

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 7 March 2008

By 28 April, tailings in TP 7 already exceeded the maximum allowed level (50.43 meters), as measured by a joint survey by MMC and MGB-Caraga with the MMT. The DENR subsequently recommended to the Pollution Adjudication Board (PAB) to issue MMC a cease-and-desist order and impose the appropriate fine. On 4 May, MMC reported that it temporarily stopped using TP 7 while local consultations were being held, but resumed dumping tailings in the dam after four days. During public consultations that were conducted to determine social acceptability, the local stakeholders continued to affirm their objection to the proposed embankment height extension, regardless of the positive assessment of the integrity of the structure by MGB and independent consultants. The local stakeholders also protested the continued use of TP 7.

In spite of the lack of social acceptability, EMS-Caraga granted MMC on 29 May the permit to construct a three-meter extension on TP 7 with conditions that include securing a building permit from the municipal government. This decision stirred protest actions by the local communities led by religious leaders. They picketed the gates of MMC for more than a month (from 12 June to 22 July) to demand MMC to cease its use of TP 7 and find another site to impound its tailings and also to demand the DENR to cancel the above permit and not to allow MMC to raise the TP 7 dam height. MGB-Caraga tried to mediate between the protesters and the mining company, but both parties chose to take their grievances to the courts.

Senator Robert Barbers, who comes from Surigao del Sur, raised the issues regarding TP 7 with the Senate Committee on the Environment. This committee, chaired by Senator , conducted a public hearing in Surigao City on 12 August. Its recommendations included the decommissioning of TP7 and the demand for MMC to comply with its commitment to put up TP 8.

On 13 November, MGB re-affirmed the structural soundness of TP7 that would allow MMC to push through with its planned construction. Disappointed with this decision and the MMC’s complete disregard for environmental and safety measures, the representative of the Diocese of Surigao resigned completely from the MRFC and MMT. Shortly, representatives of the Office of the Governor and an NGO member followed suit. Their reasons for withdrawing from the MMT of MRFC were the company’s blatant operational violations, unfulfilled development promises to the communities, and contestation of the MMT powers, as well as the lack of coherence in government action and decisions on their recommendations. They were disenchanted with the mine monitoring process. This included the overturning and questioning of some of the MMT’s recommendations by members of the MMC’s Contingent Liability Rehabilitation Fund (CLRF) committee. This committee is above the MMT.

By the end of 2000, MMC suspended its Placer operations due to lack of funds to rehabilitate its Heine Pit (where a landslide occurred in November 200 and covered the ore zone) and to construct the additional embankment for TP 7. According the MMC, the company suffered major losses from the yearlong conflict that slowed down its operations and adversely affected its productivity.viii Majority of the workers were laid off as result of the mine shutdown. By January 2001, just when MMC finally got the much-contested permit to extend the height of TP 7 to 12 meters more,

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 8 March 2008

its financial difficulties prevented MMC from actually carrying out the plan until the permit expired in July 2001.

Landslide in Heine Pit

In November 2000, a major slide occurred in the southwest portion of the Heine open pit at the height of Typhoon Toyang. The landslide material from the collapsed pit wall was approximately three million cubic meters. The regional MGB believed that the slide could have been prevented if only MMC paid attention to its recommendation regarding dangers posed by the unsafe extraction of high grade ores at the base of the southwest wall of the pit. An internal MMC feasibility study concluded that re-operating in the Heine Pit is uneconomic because of the high stripping cost involved in removing the slide materials from the pit.

Lake formed in the abandoned Heine Pit. Notice the soil-rock materials that collapsed on the pit’s southwest wall (left).

Social acceptability issues on MMC’s exploration permit in Anislagan and Malakayaix

After the cessation of its copper-gold mining operations in Barangay Magsaysay, MMC decided to focus on finding new deposits. The discovery of the Boyongan copper deposit by the joint venture team of Philex Mining Corporation and Anglo- American Corporation in the adjacent Tubod town offered a speculative idea for MMC to explore its Kalaya-an Exploration Project in the Barangays Anislagan and Makalaya in Placer, which are located northwest of the Boyongan prospect area.

On 29 December 2000, MGB-Caraga issued to MMC a one-year temporary exploration permit in Barangays Anislagan and Malakaya and MMC immediately started drilling holes in Barangay Malakaya. However, protests by the communities and the concern raised on the possible adverse impacts of the exploration drilling on the water sources of Anislagan and Malakaya and the larger part of the town kept MMC from completing its exploration drilling within the one-year permit duration.

Some residents of Malakaya as well as the manager of the Placer Water District raised their concern about the possible adverse impacts of MMC’s drilling on a major water source area located within the vicinity of the exploration site. MGB’s inspection confirmed that drilling would affect the water source area. Because of this, some Malakaya residents picketed the access road to the drill site and requested the revocation of the temporary permit of MMC. In response, the MGB conducted a study and delineated the water source area in question that was eventually declared in early 2002 as a protected water source area.

During the one-year permit period, MMC filed two cases against local residents opposing its exploration project. One was against the anti-MMC group in Malakaya,

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 9 March 2008

and the other against the Anislagan Bantay Kalikasan Task Force (ABAKATAF) that picketed the exploration site of MMC in Anislagan and also dismantled a field base put up by MMC in the area in November 2001.

After the expiry of its first exploration permit (EP) on 28 December 2001, MMC again filed for an EP with the MGB in February 2002. Among the submitted requirements for EP application were proofs of consultation and project presentation to the various barangay councils in the municipality, including a barangay resolution council of Anislagan endorsing MMC’s exploration. However, a petition signed by the barangay officials and residents of Anislagan resisting the planned exploration of MMC in their area cast doubts on the proof submitted by MMC. At the consultations done by MMC in Anislagan on 14 February, MGB staff who were invited by MMC to attend noted that the residents were not well-informed and they passionately opposed the exploration drilling. An investigation conducted by the municipal council of Placer to validate the consultations conducted by MMC council found out that of the 10 barangays in Placer where MMC conducted consultations, only Sitio Mapaso in Barangay Magsaysay was in favor of MMC’s exploration. Nevertheless, in spite of the questionable proof of consultation and the strong opposition from the Anislagan residents, MGB issued the exploration permit to MMC on 17 July 2002.

The conflicts escalated when the crew and equipment of MMC, through its sister drilling company Diamond Drilling Corporation of the (DDCP), brought in crew and equipment to the exploration drilling site in Anislagan. Multi- denominational and church-based organizations spearheaded a 24-hour barricading of roads that led to MMC’s exploration targets. They were generally against mining in their area but were specifically opposing MMC’s exploration drilling because of the company’s negative track record and the need to protect a water source zone supplying the local residents’ water needs that could be affected by MMC drilling activities.

To push through with its exploration activity, MMC obtained a Temporary Restraining Order (TRO) dated 20 August from a Parañaque Regional Trial Court that prohibited the residents from blocking MMC’s entry into Anislagan. With this, the exploration crew of DDCP forced their way into the area. DDCP argued that the protesters did not have a mayor’s permit for their barricades and that its exploration activities in the area did not need approval from the community since there was no social acceptability requirement in exploration mentioned in the Mining Act of 1995.

However, on 3 September, the local residents put up barricades again and detained the exploration crew and security guards inside the site. They barred the crew from undertaking exploration and from leaving the area. The residents also confiscated some of the crew’s equipment and blocked their food supply. Amid the tense situation in Anislagan, the bishop of the diocese mediated between the residents and the mining company. The bishop’s intervention led to the dismantling of the barricades and the release of the hostaged MMC personnel. MMC filed charges in court against the people involved in the hostage taking and loss of MMC properties.

In response to the worsening conflict situation, the MGB-Central Office wrote to the conflicting parties on 10 September to maintain a status quo with regard to the exploration activities. Prior to this, the municipal council of Placer also called on ESSC: 2003 Legacy Mines Visit – Surigao del Norte 10 March 2008

MMC to defer exploration activities in the said areas on account of the company’s failure to fulfill previous commitments to the Placer people. This includes MMC’s commitments such as implementing livelihood projects in areas affected by its previous operations and installing safety measures to its mine structures to guarantee the safety of Placer residents. It also passed a municipal council resolution on 9 September requesting MGB-Caraga to declare a moratorium on MMC’s exploration in Barangay Anislagan. Further, DENR Secretary Heherson Alvarez suspended mining exploration activities in the area on 17 September in response to the growing social unrest in Placer and Senator Robert Barbers’ letter to the DENR seeking the cancellation of the EP on behalf of the local people.

Residents warned that violence might again erupt if MMC would defy the moratorium given by the MGB and the DENR Secretary for exploration in the area. When some anti-MMC residents found out that the exploration crew stealthily moved their equipment to the target area, in violation of the DENR-MGB’s order for both parties to observe status quo, they set on fire the drilling machines of MMC-DDCP on 11 October.

For MMC, the key challenge is in overcoming the prevalent bad reputation of the company. According to some town officials, church leaders, and the regional MGB, the major reasons why MMC activities still have very low social acceptability in Placer lie in the numerous unfulfilled commitments of the company to the people affected by its previous operations; the company’s blatant disregard for community and government suggestions and recommendations regarding its mining activities; and its intimidating approach in dealing with other mining stakeholders in consultation meetings. Placer’s officials say that the company still has numerous commitments contained in the company’s MOA with the town that it failed to carry out. The impression of the town officials is that MMC’s higher corporate leaders do not recognize MMC’s MOA with the LGU.

Most of the Placer municipal officials and Anislagan barangay officials who got elected in the 2001 elections are against MMC. The company claimed that many of the anti-MMC candidates won due to the financial support of rich and influential anti- MMC families. Disagreeing with this, the diocese leaders said that the result of the last election was a genuine reflection of the widespread anti-MMC sentiment in Placer and that the local elite actually supported pro-MMC candidates.

Following the imposition of the status quo in Anislagan, MMC focused on convincing the Makalaya barangay council. There was a less intense anti-MMC campaign in Malakaya than in Anislagan. MMC’s strategy to win over the anti-MMC Malakaya officials and residents was to organize the informal ladies’ organization into a cooperative to earn their trust of the company. MMC realized that organizing the cooperative was “an effective tool in getting the interest of the people because it also satisfies the need of the people for livelihood projects.” MMC also brought the barangay officials to the Lepanto mine site. The visit was instrumental in changing the barangay officials’ negative view of the company and in persuading them to enter into an MOA with MMC to allow exploration drilling in Malakaya. MMC reports that “although there was little hesitation from the barangay council, MMC was able to enter the area.” x

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 11 March 2008

On the other hand, MMC’s exploration project remains off-limits in Anislagan while the status quo order is still in effect. For this to be lifted, the barangay council of Anislagan must pass a resolution declaring their favorable endorsement of MMC’s exploration drilling. The provincial council will subsequently pass a resolution that attests that exploration project is acceptable to the Anislagan community and that also endorses the cancellation of the order. These LGU resolutions then form the bases for the MGB and DENR Secretary to lift the order.

MMC MINE SITE IN PLACER: PRESENT SITUATION AND FUTURE PLANS

MMC’s unclear plans for Placer mine

More than two years since its closure, MMC’s plans for its Placer mine are unclear. The total mine reserves left in its existing pits in Placer were already nearing depletion before the suspension of its operations in December 2000. Earlier in 1997, MGB-Caraga estimated the remaining mine life of the MMC Placer mine to be five years. MMC’s estimated total gold and copper reserves was estimated as of January 1999 at 13.3 million tonnes, approximately 1.45% gold and 0.42% copper.xi In 2000, total gold and copper reserves from its N-tina, Suyoc, and Emma pits added up to 3.5 million tonnes only.xii With this depleting ore reserve, MMC should have complied by now with the conditions of its ECC concerning mine closure and mine site rehabilitation and development plans.

MGB has continually demanded from MMC to submit its proposed Environment Protection and Enhancement Program (EPEP) that the company should already be implementing. However, the company has yet to submit its EPEP and other requirements to MGB.

Presently, MMC is selling many of its properties. The company undertakes only care and maintenance activities for its existing facilities. No rehabilitation or development projects are being implemented in the mine site and impact areas. The company is considering to use its old mine pits as tailings pond if it would re-operate in its Placer mine site.

LGU proposal to open site to small scale mining

The local government of Placer plans to open the MMC mines to small-scale mining if MMC will no longer operate and fail to meet its obligations to the local government and the Placer residents. The town government demands that MMC should completely rehabilitate its mine sites and that it should live up to its commitments and responsibilities stated in its MOA with the local community.

MMC’s on-going consultations in Anislagan and exploration in Malakaya

In the Makalaya and Anislagan exploration target areas, MMC is continuing its efforts to talk with the residents. MMC was able to convince the barangay officials of Malakaya to endorse its exploration drilling. In Anislagan, where MMC is still encountering firm opposition, the company has now resorted to a diplomatic, non- antagonistic approach, through the conduct of its information-education- ESSC: 2003 Legacy Mines Visit – Surigao del Norte 12 March 2008

communication (IEC) with the barangay officials and residents. MMC hopes to implement its community development program in this area prior to the recommencement of its exploration activities.

MMC MINING ISSUES: QUESTIONS AND CHALLENGES

Effectiveness of the multipartite monitoring

The creation of venues for local multi-stakeholder groups to be directly involved in the mine monitoring process in Surigao del Norte is a milestone in incorporating a level of local governance in mining. This experience placed the mining district a step ahead of other areas in the country where large-scale mining operations are taking place. However, the initial partnerships and trust built among the local stakeholder- members in the multipartite monitoring process were significantly eroded by MMC’s adversarial and defiant responses to the critical concerns that the MMT-MRFC raised over TP 7. The yearlong conflict over TP 7 that saw the company’s repeated defiance of recommendations of the MMT-MRFC and even orders from the MGB and EMS, as well as its disregard for the lack of social acceptability of its planned elevation of the embankment of its tailings pond, revealed weaknesses of the multipartite monitoring process.

While there was earnest effort on the part of MMC’s MMT and the MRFC to perform their tasks of ensuring that MMC complied with the environmental and social conditions specified in its ECC, this was not matched with sincerity on the part of MMC to respond constructively. The commitment of MMC was questionable when, throughout 2000, it refused to recognize and act on the fact that the tailings dam breached the permitted height, and when it challenged the power of the MMT-MRFC, which the company was part of until the monitoring groups raised protests against it.

Former MMT members of the MMC mine were dismayed when they realized that they really had no direct and clear authority over the activities of the mine they were monitoring and were not part of the final decision making. The MGB and EMS initially adopted the recommendations of the MMT-MRFC, but their decisions were not coherent over time.

The undermining of the authority of the MMT and the MRFC can weaken the multi- stakeholder monitoring process in general. The loss of confidence in the capacity of the multi-stakeholder mechanisms, distrust in the commitment of a mining company, and lack of faith in the capacity and will of concerned line agencies to really regulate mining companies and ensure their compliance with environmental and social controls and standards may yet spill over to the MMTs of other mining companies.

The experience of the MMT of MMC and the regional MRFC to take the mining company to task for violations of its commitments, despite limited success, showed the potential of these mechanisms in promoting a level of local governance in mining. The initial advances made in fostering partnership among the local stakeholders and implementing a participatory, transparent and honest monitoring process in the Surigao mining district allowed onsite stakeholders to take part in ensuring responsible practices in environmental management and social development. However, with the undermining of the authority of these monitoring mechanisms, ESSC: 2003 Legacy Mines Visit – Surigao del Norte 13 March 2008

there is a need to first restore stakeholders’ trust in the local multi-stakeholder monitoring process, which necessitates real commitment from mining companies and effective governance.

On the one hand, the CTWG has the edge over the mandated MMT-MRFC as there are no legal limitations in membership, composition, and scope of monitoring. On the other hand, its lack of a legal basis may be a disadvantage. In case the monitoring group gets into serious disputes with a mining company over the latter’s unfulfilled or violated commitments, the company may ignore the CTWG and contest its legal mandate.

Tracking MMC’s record in mining and impelling corporate social responsibility and accountability

The track record of Manila Mining Corporation in environmental management in just over two decades of operation in Placer shows numerous cases of violation of environmental policies and three major environmental disasters.

Sporadic tailings spill events in the past resulted in loss of lives, siltation and contamination of Placer Bay, Batayakan marshland area, waterways and croplands in the lower areas and fishkills. , Water source depletion, siltation and flooding in the coastal areas are now common problems. The low level of MMC responsibility and accountability is shown by the company’s completion of only 17% of its Bayatakan Rehabilitation Program as of April 2002, three years after the TP 7 failure.

After MMC announced its closure in July 2001, the primary question of local stakeholder is, when will the company implement its rehabilitation and social development programs? Local communities and local government units claim that there are commitments of the company contained in their MOA that are yet unmet. Given the status of ore reserve in MMC’s Placer mine site, MMC should have already started implementing post-operation rehabilitation measures. Under the law, planning and preparation for mine closure should begin five years before an operation ceases. If MMC does not have enough operational resources or if mining in Placer is no longer profitable, how will the company finance the rehabilitation and development programs that come with mine closure as provided in the ECC?

Was MMC’s decision to suspend operations in early 2001 really due to lack of funds or is it really intended to circumvent the regulations in a way that it could delay the threat of mine closure and enter into costly rehabilitation and development programs in the mine site? If the company were to declare the operation closed, there would be a substantial cost associated with rehabilitating the site and all the attendant social processes under the law.

With regard to community relations and development, MMC’s performance is, in general, wanting and poorly managed.

According to local officials, MMC still has to pay many of its retrenched workers and the victims of its past tailings dam disasters. They also said that a number of the company’s present care-and-maintenance workers from Placer are paid irregularly. The municipal government has plans of taking MMC to court for the company’s ESSC: 2003 Legacy Mines Visit – Surigao del Norte 14 March 2008

failure to pay accumulated taxes and to reply to the LGU’s collection notices. To date, MMC owes the local government approximately PhP 12 million in real property taxes.

MMC’s relations with local stakeholders in the past three years were fraught with conflicts. MMC’s approach tends to be too “legalistic” as seen in how it opted to press on with its permit aggressively, even in the face of strong opposition. At the start of the implementation of MMC’s exploration project in Barangay Anislagan, it was already met with mounting local opposition. But rather than put on hold their exploration activities and talk with the community as was recommended by the MGB a few times, MMC pressed ahead in the firm belief that they were not in violation of any regulations. MMC’s main line of response to local opposition has been to take local residents to court. The rule of law does not preclude consultations with stakeholders to address local concerns or dialogues to settle conflicts.

The company’s definition of community consultation was questioned. As MGB remarked during a consultation conducted by MMC in Anislagan on 14 February 2002, the residents were not well informed of the planned mining activity in the area. Consultations are meant for the company to fully disclose their mining project in the area. The Anislagan residents and officials disclaimed the barangay council resolution endorsing MMC’s exploration submitted by the company as part of the requirements for EP application, which questions the validity of MMC’s EP. Realizing the ineffectiveness of its aggressive approach, MMC shifted to talking with the communities.

The MMC has largely attributed the prevalent anti-MMC sentiment in Anislagan to the sustained propaganda of local church leaders, seemingly forgetting that its negative image is largely part of its own making. To be fair to the officials and residents of Barangay Malakaya, MMC should not only present them with a scenario of a mine in operation (Lepanto mine site) but should also acknowledge the scenario of its closed mine site in Placer where rehabilitation is being delayed. MMC would like to promote the company in Malakaya and Anislagan as “an environmentally friendly and socially responsive entity whose business is sustainable management of the mineral resources and provision of jobs and opportunities in the country, particularly the local host communities”.xiii Proving this new image of the company, however, would require more than just words. Their track record cannot be changed overnight, and trust cannot be gained or regained without sincere action.

Mining governance issues

On 11 July 2002, MGB-Central Office issued to MMC its Certificate of Satisfactory Environmental Management and Community Relations Record (CEMCRR), which is a requirement in MMC’s application for an exploration permit. To what extent was the track record of MMC taken into consideration in this clearance?

There is a need to define clear guidelines and procedures for screening “satisfactory” performance in both areas of environmental management and community relations so that the signing-off of a clearance will seriously evaluate each company’s mining history. When the MGB screens a mining company on its environmental management and community relations, it does not only screen that particular mining ESSC: 2003 Legacy Mines Visit – Surigao del Norte 15 March 2008

company but indirectly, other companies as well. Putting in place a level of standard and greater consistency in implementation and decisions will contribute to enhancing the quality of mining in the country.

The assessment of a firm’s track record to determine its worthiness for another mining project, as one of the requirements for permit application subsequent to ongoing or past mining operations, serves as a check mechanism for mining firms. This will help ensure that they will adopt at least minimum standards in environmental management and social development during and post operation, as well as improve the quality of corporate responsibility and accountability.

Compelling mining companies to meet their corporate responsibilities and accountabilities in post-operation rehabilitation is one area where governance in mining continues to fail. In the case of MMC, local stakeholders and civil society groups called for the government to decisively act on the serious matter of MMC’s failure to comply with post-mining operation commitments.

An area of concern that needs to be cleared by the government is regarding the legal authority of the MGB to regulate company mining or to force companies to carry out its recommendations. Previous MGB recommendations to MMC that could have prevented possible disasters were not immediately followed or were completely ignored by the company.

At present, the role of the EMB in monitoring the activities of mining companies and in enforcing effectively the sanctions to erring companies not complying with requirements of environmental policies remain as gaps in mining governance. In the Placer area, the EMB has apparently passed on its monitoring roles to MGB.

The high risk of water contamination and air pollution that mining operations entail, the degradation of water condition in rivers drained by ongoing or previous mining operation sites, and the actual mining disaster events that caused the release of toxic wastes and sediments into streams and coastal waters should provide adequate justification for more active involvement of the EMB in mine monitoring. The Environmental Management Section (EMS) should also be made mandatory members of local multipartite monitoring mechanisms. They can then be directly involved in the actual monitoring of mine sites and can give inputs when the MMT undertakes a decision making process on what steps to take should there be violations of environmental laws, especially in relation to ensuring good water quality of rivers, air quality, and waste disposal and management that are sources of water contamination. This may cut back the bureaucratic procedures in the handling of pollution cases.

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 16 March 2008

REFERENCES

Bureau of Mines and Geo-Sciences (BMG), Ministry of Natural Resources. 1986. Geology and Mineral Resources of the Philippines, v. 2 (Mineral Resources).

Caliguid, F. 2002. Surigao Residents Burn Mining Equipment. Philippine Daily Inquirer. News article. p A16.

Cluster on the Environment and Indigenous Peoples, ESSC-Bishops-Businessmen’s Conference for Human Development. 2000. Surigao del Norte Mining Dialogue (29 November to 01 December 2000) Briefing Kit. 16pp.

ESSC. 1999. Mining Revisited: Can An Understanding Of Perspectives Help? Quezon City: Philippines.

ESSC-PWG (Environmental Science for Social Change-Philippine Working Group). 2003. PWG Meeting on the National Minerals Policy handout.

Manila Mining Corporation a. 2003. First Semester Exploration Work Program Implementation Report on the Kalayaan Project (MMC-EP NO. 00014-XIII). MMC Internal Report.

Manila Mining Corporation b. 1999. Manila Mining Annual Report for 1998.

Mines and Geosciences Bureau (MGB). 2003a. Manila Mining Corporation’s Exploration at Barangay Anislagan, Placer, Surigao del Norte. Fact sheet from MGB website.

Mines and Geosciences Bureau. 2003b. Factsheets on the Manila Mining Corporation’s Raising of Tailings Pond 7.

Mines and Geosciences Bureau, CARAGA Region. 2003. Presentation Materials.

(www.antenna.nl/wise/uranium/mdaf.html). Web page.

(www.mineralresourcesforum.org/incidents/ cn_accidents.htm). Web page.

(www.newsflash.org/2001/07/be/be001756.htm). Web page.

DENR Case No. 13-98-01. Administrative Case versus Manila Mining Corp. for Violation of P.D. 1586 and Its Implementing Rules and Regulations. 27 July 1998.

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 17 March 2008

ENDNOTES i The barangays of Surigao del Norte are Amoslog, Anislagan, Bad-as, Boyongan, Bugas-bugas, Central (Poblacion), Ellaperal (Nonoc), Ipil (Poblacion), Magsaysay (Poblacion), Magupange, Pananay-an, Panhutongan, Poblacion, Sani-sani, Santa Cruz, Suyoc and Tagbongabong. ii (www.newsflash.org/2001/07/be/be001756.htm) iii(www.mineralresourcesforum.org/incidents/ cn_accidents.htm). Web page. iv DENR Case No. 13-98-01. Administrative Case versus Manila Mining Corp. for Violation of P.D. 1586 and Its Implementing Rules and Regulations. 27 July 1998. v MGB-CARAGA, 2003. vi (www.antenna.nl/wise/uranium/mdaf.html). Web page. vii See MGB-Caraga. Chronoly of of Events/Salient on the Raising of the Embankment of Tailings Pond 7. Manila Mining Corp. (MMC), Placer, Surigao del Norte. viii (www.newsflash.org/2001/07/be/be001756.htm). Web page. ix MGB-Caraga. Chronology of Events on the Exploration Activities of Manila Mining Corp. (MMC) Located at Barangays Malacaya and Anislagan, Placer, Surigao del Norte. x Manila Mining Corporationa. 2003. First Semester Exploration Work Program Implementation Report on the Kalayaan Project (MMC-EP NO. 00014-XIII). MMC Internal Report. xi MMC 1999. Manila Mining Corporationb. 1999. Manila Mining Annual Report for 1998. xii Ranin, pers. comm. 2003 xiii Manila Mining Corporationa. 2003. First Semester Exploration Work Program Implementation Report on the Kalayaan Project (MMC-EP NO. 00014-XIII). MMC Internal Report.

ESSC: 2003 Legacy Mines Visit – Surigao del Norte 18 March 2008