Friday, January 27, 2012

The Tampakan Project and Why Foreign Investors are wary about the Philippines

DENR secretary Ramon Paje just issued a denial of the Environmental Compliance Certificate of Sagitarrius Mines Incorporated (SMI), the major and only contractor in the Tampakan Copper-Gold project in Mindanao. Paje said in his denial that SMI should resolve the contentious open pit mining ban issued by the Provincial Government of South Cotabato before an ECC is to be issued for SMI. 


I simply don't understand the logic of Mr. Paje. Based on law and existing jurisprudence, the issuance of the ECC is ministerial in nature by the authorising agency, the Mines and Geosciences Bureau of the DENR. An ECC is a right or privilege granted to a juridical entity to explore the natural resources of a given area. The requirement is simple---when an entity submits its Environmental Impact Study and the EIS is deemed substantial compliance already by the MGB, the issuance of an ECC is already given and is ministerial.


There is no provision in existing law that an ECC can be denied simply on the basis of a ban imposed by a local government unit nor is it based on the whims and caprices of a Cabinet secretary. The law is clear--to avoid an exercise of excess power and jurisdiction by a Cabinet member, the legislature made it substantially clear that the denial of an ECC can only be imposed if the applicant has violated existing laws or has not made any study to mitigate the impact of such an exploration. Simple. Clear. 


Is there any other reason to deny the ECC of a compliant SMI? 


Mr. Paje should be made aware that the Tampakan PROJECT is a government project. It is not a private initiative of SMI. SMI is not just working for itself---it is a contractor of government. As a contractor of government, it is entitled to the full support of government, whether Paje likes it or not. It is the government that asked SMI to assist it in minerals exploration of Tampakan and not the other way around. When SMI passed the regulatory conditions set forth by the government as a contractor and when SMI won the contract, it is already presumed that the government already reviewed the technical competence of SMI as a contractor. 


Don't tell me that now, government is reversing itself by saying that the very contractor it chose to handle the project is incompetent or technically unfit to handle the project? Who actually made the decision to hire SMI, ISN'T THE GOVERNMENT ITSELF?


Mr Paje's decision lay bare a government trying to undermine itself. That is not what President Aquino III wants. When he made a statement yesterday, assuring the business community of an open and liberal economy, President Aquino was trying to communicate to the foreign and local investor community of government non-interference to the business community.


How, then, can President Aquino explain this? 


Even Mr. Paje's logic is very unsound. He says in numerous interviews that SMI should go to the courts as a remedy. 


The Tampakan Copper-Gold project is one of the most ambitious minerals project of the GOvernment of the Republic of the Philippines. The project is expected to generate close to 39.8 billion pesos in royalty payments alone to the indigenous communities there in Tampakan. That amount would substantially develop the area and erase the scourge of poverty in that part of Mindanao. Imagine how many jobs would be generated by that.


SMI has spent close to 135 million pesos already in development projects alone in Tampakan. SMI is also the top revenue payor in the country. Other benefits include:



The region would enjoy substantial benefits from the mine which include:

  • An annual contribution of on average PhP134 billion to Philippine gross domestic product (GDP) each year over the construction and operation phases – equivalent to an additional annual increase of 1% to Philippine GDP
  • Total government revenues (national and local) through a variety of taxes and charges of approximately PhP307 billion (nominal) over the life of the Project
  • Royalty payments and direct contributions in excess of PhP39.8billion (nominal) to local communities and local indigenous groups over the Project’s life
  • Opportunities for approximately 10,000 workers during the peak of the construction phase and direct employment opportunities for approximately 2,000 workers during the operations phase
  • Engagement of local contractors and service providers, generating further substantial employment within the Philippines.
Quite often, President Aquino has been severely criticized for not taking care of the economy. He was previously even blamed for the lack luster performance of the economy.

Now, this humongous investment project lies before him and his cabinet. As a government project, SMI deserves the full support of the Aquino administration. This project, if operationalize, would be the fifth largest copper-gold mine in the world and the largest in the Philippines. 

Why make it extremely hard for SMI as a government partner to secure all these clearances and permits? Is Paje waiting for something?

I am afraid that if this administration mismanages or mishandles this issue, this could explode right before the very faces of these Cabinet members.