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Title: Against the Hallmark Nickel Project (Philippines) Date: October 28, 2009 Language: en Topics: Philippines, indigenous
From anarchists in Philippines involved in resistance:
Autonomous resistance against eco-destruction and social turmoil carried
out by capital needs to develop unbounded and analyzed upon creating a
revolutionary plight in reclaiming direct control towards freedom —
liberatory space and unconstrained desire and capacity beyond the
bondages of imagination to put into action — without compromise. The
struggle against domination, the enemy — state, capital and religion
acquiring and exploiting the earth landscape as extractable resources
manifests the ever-growing contagious outbreak of various oppositional
elements and social conventions concealed within the legal framework and
morality of lobbying, servitude and pacifism until natural life is
mechanically being reduced and controlled into the hands of conservation
experts, scientists and sustainable management schemes as a means of
reaction to such atrocious events. Ideological dogma, reformism and
centralized administrative structures often becomes the product of deeds
and academic indoctrination consequently suppressing the burning rage of
defiance and revolt against the social order and ecological havoc
maintained by the ruling forces. Such logic is inflicting coercion over
other life forms — a totalitarian mindset taking place within the
driving stages and development of social experimentation and control.
The Hallmark Nickel Project is one of the 23 priority mining projects
that are part of the Philippines government’s 2004 Minerals Action Plan.
Spearheaded by President Arroyo, the plan aims to revitalize the
Philippine mining industry and encourage foreign investment as a driver
for national development. Hallmark demonstrates the complexity of
international mining projects and the challenges in ensuring
sufficiently high social and environmental standards are met by
international mining companies and their joint venture partners.
The Hallmark project comprises seven exploration permits covering an
area of approximately 13,500 hectares-more than 100 times the size of
London’s Hyde Park — in Davao Oriental Province, south-eastern Mindanao.
The permits were granted to seven Philippine companies, collectively
represented by Asiaticus Management Corporation (AMCOR). On 21 March
2001 AMCOR signed a memorandum of understanding with BHP Billiton and in
2002 the 2 companies entered into a joint venture and shareholders
agreement to form the Hallmark project. Approval for the mining permits
was given by the government in 2004 and 2005.
BHP Billiton’s capital costs for the project are US$ 1.5–3.0 billion,
making it a sizeable share of its stainless steel materials portfolio,
under which nickel mining and production falls. The joint venture
agreement is a 60:40 percent equity split between AMCOR and BHP Billiton
respectively.
BHP Billiton and the Philippine government estimate the project’s nickel
resource to be around 150 million metric tonnes. In 2007, the government
estimated its gross value at around US $22.7 billion. The government
also estimates that it will receive approximately US$10 million in
excise tax and US$70 million in income tax per year.
BHP Billiton plans to develop a nickel processing plant and operate a
mine for around 30 years. It says the plant will use the high-pressure
acid-leach method, or hydrometallurgical technology, and is expected to
have an annual capacity of 35–50,000 metric tonnes of nickel- the
equivalent at least three times the weight of Eiffel tower- for export
to countries such as China, Japan and Australia.
The project is currently in the exploration phase with mine production
anticipated to begin around 2014/15. However the Hallmark project has
permits for exploration only and not production, so must now secure
Philippine government approval before the mine can actually developed.
Macambol is a coastal community on a narrow strip of land between two
protected areas of rare natural beauty : the Hamiguitan range and Pujada
Bay. The mining permits for the Hallmark project fall within the
boundaries of Macambol and adjacent Cabuaya local government areas under
Mati City in Davao Oriental Province. About 5,000 people live in
Macambol, approximately 25 percent of whom are indigenous Mandaya
people. Most of the people depend on the natural environment for
survival, making a living by fishing and farming mango, coconut and root
crops. Average family incomes are low, at around php 5000–8000 per
quarter. 1 pound or less a day.
BHP Billiton is the world’s largest mining company, engaged in the
exploration and development of a wide range of metals and minerals,
including aluminium, coal, copper, manganese, iron ore, uranium, nickel,
silver, and titanium. BHP Billiton 2007/08 figures show that the company
is the largest producer of metallurgical coal, the third largest
producer of nickel and the sixth largest producer of aluminium. BHP
Billiton also have substantial interests in oil, gas, liquefied natural
gas and diamonds.
The company was formed in 2001 by the merger of two mining companies,
Australia’s BHP and UK’s Billiton. BHP Billiton is a dual-listed company
but is run as a single entity, with one board of directors and
management. Its head office is in London and Melbourne. BHP Billiton has
primary listings on the London Stock Exchange and the Australian Stock
Exchange, and secondary listings in Johannesburg and New York.
BHP Billiton had other interests in the Philippines aside from Hallmark
Nickel project. It has ore-supply agreements, through its Philippine
subsidiary Queensland Nickel Inc. to purchase nickel for its Yabulu
refinery in Australia, from various mines and companies in the
Philippines.
Very little is known about Asiaticus Management Corporation, BHP
Billiton joint venture partner in the Hallmark project. Minimal
information on the AMCOR website reveals that the company was organized
in 1996 to provide management, investment and technical advice for
mining entities and companies with mineral claims. It facilitates
partnership or joint ventures between local and foreign mining entities
and companies and markets mineral ore.
The people behind AMCOR, such as company president Pedro O. Tan, vice
president and corporate secretary Lauriano A. Barrios, and former
chairman Arthur L. Villaraza are well connected and have close links
with the current government, Villaraza, and his Villaraza Cruz Marcelo
and Angangco law firm was the private legal counsel of President Arroyo
until 2005.
During 2007, details of a rift between BHP Billiton and AMCOR appeared
in the media. While the exact nature of the dispute is unclear, the
relationship between the two companies has seriously deteriorated over
the past year and they are currently locked in a legal battle. This
dispute has had a major impact on the community in Macambol, creating
uncertainty surrounding which company will be operating the project if
it goes ahead.
Little information about the status of the dispute has been made
available to the community and the actions of both companies have
contributed to tensions within Macambol. Many believe that each company
is using divisive and manipulative tactics to demonstrate they have
community backing and that the other does not. According to press
reports and company information, the dispute centres on the proposed
start date for the Hallmark project. AMCOR would like to begin nickel
production immediately and allege that BHP Billiton had failed to meet
the obligations of their agreement. Ruben Tan, AMCOR’s vice-president,
has said his company was promised that BHP Billiton would begin mine
production five years after signing the joint venture agreement.
According to a company official, AMCOR “must earn money now” and so
would like to begin exporting unprocessed nickel laterite ore to take
advantage of the high nickel price. BHP Billiton maintain the timeline
for exploration, feasibility studies and building the processing plant
mean a start date of around 2014/15.
The dispute has become ever more public and murky over recent months
;according to an unknown source quoted in the media, a “wheeler and
dealer” with close links to the Arroyo administration has tried to
extort 200million pesos more from BHP Billiton than detailed in their
exploration contract.
On 25 July 2007 AMCOR attempted to rescind the joint venture agreement
with BHP Billiton, and according to AMCOR officials interviewed by
Cafod, is filing a case against BHP Billiton for fraud at the Makati
regional trial court in Manila. A series of legal actions led to a court
injunction against BHP Billiton in May 2008 barring it from “using,
occupying, exploring, developing, and exercising acts of ownership of
mining right over the Pujada properties.
The parties are undergoing an international arbitration process in
Singapore, to prevent AMCOR from rescinding its joint venture. At the
time of writing, they had yet to reach agreement, although a preliminary
judgment from the tribunal was in BHP Billiton’s favour. Some recent
media reports confirm BHP Billiton’s commitment to the Hallmark project,
hinting that the parties may be close to reaching a compromise
agreement.
Under the Mining Act, all public and private lands are open to mining
operations. It states “all mineral resources in public or private lands,
including timber or forestlands shall be open to mineral agreements or
financial or technical assistance agreement applications.” This
provision has led to critics’ contention that the law has virtually
opened up the entire country to mining operations. The latter includes
old growth forests, national parks, bird sanctuaries, and marine
reserves among others. But upon the consent of the government or other
concerned parties, areas barred from mining operations can still be
mined. This area includes military reservations, areas covered by small
scale mining and ancestral lands.
The Mining Act allowed three major kinds of mining rights that would
govern access to mineral resources and for which an interested investor
may apply. These are Exploration Permit (EP), the mineral agreement and
the Financial or Technical Assistance Agreement (FTAA).
An exploration permit grants the right to explore a specified area for a
period of two years. If a mineral deposit is found and has potential
commercial viability, the permit holder has the right to enter into any
type of mineral agreement or financial or technical agreement with the
government.
A mineral agreement grants the contractor the right to conduct mining
operation within a specified contract area for a 25 years, renewable for
another 25 years. There are three modes of mineral agreements: The
Mineral Production Sharing Agreement (MPSA), the co-production agreement
and the joint venture agreement. The three modes differ in the extent to
which the government is involved in the mining operation. In the MPSA,
the government merely grants the right to the mineral resources whereas
the contractor provides the financing, technology, management and
personnel for the implementation of the agreement. In a co-production
agreement, the government contributes other resources in addition to the
rights. A joint venture agreement requires the government and the
contractor to organize a joint venture company in which both parties has
equity shares. In all three cases, the mining contractor should be
either a Filipino citizen or a corporation having at least 60% Filipino
equity.
For large-scale mining operations, the government may opt to enter into
a Financial or Technical Assistance Agreement (FTAA) with either
financial or technical assistance for the large-scale exploration,
development and utilization of mineral resources. As this provides
foreign mining companies to have full equity and control of mining
projects throughout the country, it has become the focus of opposition
against the law. For the minimum investment of $50 million (or its
equivalent in peso for a Filipino corporation), the mining firm is
granted 81,000 hectares of land for mineral exploitation for a period of
25 years per contract, renewable for a maximum of another 25 years.
Indigenous communities and non-governmental organizations (NGO’s) have
questioned the legality of the FTAA provision. According to them, the
act and its implementing Rules and Regulations allow foreign companies
not only both financial or technical assistance agreement with foreign
owned-corporations, it is an agreement for mere assistance, which is
either technical or financial. They assert that the Constitution does
not allow foreign corporations to actually control, manage or engage in
full mining operations. They interpret the Constitutional provision on
financial or technical assistance agreements as in itself restrictive of
the participation of foreign-owned corporations in exploiting the
country’s mineral resources.
Aside from the generous contract terms above, the law also provides
auxiliary rights that will ensure that the mining rights are exercised
unhampered. These auxiliary rights include the right to enter private
lands, the right to build necessary infrastructure on private lands as
well as water and timber rights within the mining area as necessitated
by the mining operations.
Furthermore, the law provides a host of fiscal incentives that will
guarantee returned investments and profitability to the mining
contractor. These includes a 100 percent repatriation of investment in
dollars, a 100% remittance of earnings in dollars, freedom from
expropriation, and double acceleration of depreciation costs, among
others. Additionally, the collection of government’s share in the
financial or technical assistance agreement, consisting of corporate
income tax, excise tax, and other duties and fees, shall commence only
after the mining operator has fully recovered its pre-operating
expenses. When the mining contractor starts commercial production, a
revenue sharing scheme begins wherein the government will receive 60% of
the net profit from the operation while the contractor receives 40%.
However, all corporate taxes, excise taxes, duties and fees, payable by
the corporation will be counted against the government’s 60 percent
share.
As of December 1996, 100 FTAA applications and 1,454 MPSA applications
have been filed before the Department of Environmental and Natural
Resources- Mines and Geosciences Bureau (DENR-MGB). Of the FTAA
applications, 99 were filed by foreign-owned mining corporations and
only one was filed by Filipino mining company Benguet Corp. which is
nonetheless partly foreign-owned. It is also interesting to note that of
these FTAA applications, 52 were filed before the approval of the Mining
Act, while 14 were submitted before the Implementing Rules and
Regulations of the Act were finalized on August 15, 1995. The total
areas of the application cover approximately 12.2 million hectares of
the land area of the Philippines. If all FTAA applications and MPSAs
were approved, 40.65 percent of the country’s total land area will be
covered by mining claims.
The DENR-MGB,however, quickly points out that not all applications will
be approved and that the grant of 81,000 hectares for mineral
exploration is subject to a progressive reduction or relinquishment
where the mining contractor returns to the government areas that low
mineral potential. The DENR-MGB stresses that the law allows a
contractor a maximum of only 5,000 hectares for actual mining and
commercial production that will commence after the sixth year of the
contract period. NGO’s and indigenous communities points out that while
relinquishment does significantly reduce the land area open to mining
activities, 5,000 hectares is still a huge land area, especially in a
country were landlessness remains perennial problems.
Indigenous people and environmental groups also raise concern over the
potential environmental effects of more large-scale mining activities
should these be allowed to commence. With the 1996 Marcopper mining
disaster in Marinduque and the ravages of open pit mining in Benguet as
the examples of the potential impact, these groups believe that mining
operations of the FTAA scale could wreck havoc on the country’s
environment.
Another key feature of the Mining Act pertains to the issue of ancestral
lands of indigenous communities. The Act deems ancestral land as closed
to mining operations without the prior consent of the indigenous
cultural community concerned. The Act defines prior consent as referring
to “prior, informed consent” obtained, as far as practicable, in
accordance with the customary laws of the indigenous peoples concerned.
The law also requires that consent endeavour to be informed through
public notices or public consultations wherein the contractor fully
discloses the details of the operation. The process of arriving at an
inform consent should be free from fraud, external influence and
manipulations”. The DENR-MGB has trumpeted as significant this
requirement of prior informed consent. The provision, according to the
agency, strengthens government’s cognizance of indigenous peoples’
rights to their land and their desire for a more active involvement in
decision-making processes.
Indigenous peoples and their advocates, however, are critical. While
they concede that the provisions gives indigenous peoples the
wherewithal to approved or reject a mining application in their
communities, they also ask whether, in conditions of deprivation and in
the absence of genuine development alternatives, they are being given
any option at all.