November - December 2008
Minding mining
After Marcopper

The Canadian quandary

MANILA, PHILIPPINES AND LETHBRIDGE, CANADA — Canadian companies are major players in the global mining industry, and so it’s no surprise that they have more than made their presence felt in the Philippines. Unfortunately, that presence has not always been welcome — at least not by the immediate host communities. Worse, Canadian mining firms have acquired a notorious reputation in the Philippines, and there are indications that this is not about to change anytime soon.

In Zamboanga del Norte, for example, indigenous Subanon elders like Timuay Fernando Mudai say that TVI Resource Development Philippines, Inc (TVI), a subsidiary of the Canada-based TVI (Toronto Ventures Incorporated) Pacific, has made “a dumpsite” of Mount Canatuan, which the Subanon consider sacred. Another Canadian mining firm with operations in Surigao del Norte, meanwhile, has been criticized for supposedly using “selected” members of indigenous peoples from its home country to convince their Filipino counterparts about the benefits of mining.

Canatuan open-pit mine (photo courtesy of TVI Resource Development Philippines Inc.)

A few years back, in Mindoro Oriental, a subsidiary of a Canadian company had the locals up in arms after proposing a mine-tailings disposal method that could have damaged their fishing grounds.

It has not helped these firms any that a Canadian mining giant was involved in what is still considered the worst mining disaster in the Philippines, and that much of the toxic mining wastes it generated has remained in the host area.

Canada is the world’s largest exporter of metals and minerals. In 2004 alone, the Canadian extractive sector invested 26.6 billion Canadian dollars (about $22 billion using today’s rates) in foreign countries. In the Philippines, Canadian companies rank second only to Australian firms in terms of the number of projects and total amount of investments in mining. Official data show that there are six Canadian mining companies with a combined total of 13 projects in the Philippines. The total declared project cost of these ventures, which aim to extract silver, gold, copper, and nickel, is about $1.26 billion.

Mining companies operating in Canada are subject to relatively strict environmental and social regulations. Government controls and public scrutiny demand that mining firms there be good corporate citizens and manage the impact of their operations. Canadians presumably want the same standards applied to these companies even in overseas projects, and have been known to voice their concerns when Canadian firms misbehave abroad. That is, of course, assuming that such news make the headlines in Canada. Apparently, that is not the case when it comes to Canadian mining firms operating in the Philippines.

In part, this may be because the Canadian companies involved in Philippine mining projects these days are what the Philippines’ Mining and Geosciences Bureau (MGB) classifies as “junior,” which may afford them less scrutiny in their home country. According to the MGB, which is part of the Department of Environment and Natural Resources (DENR), junior mining firms are those with small projects and capitalization. TVI, which has the biggest investment and most advanced operations among the Canadian firms, has spent $34.6 million on the Canatuan project in Zamboanga del Norte, a modest amount compared to the billions of dollars spent by other foreign mining companies in the Philippines.

Among the six Canadian mining corporations in the Philippines, it is only TVI that has had sporadic mention in Canadian media, based on an article search in that country’s newspapers, magazines, journals, newspapers, and newsletters, beginning 1999 onward. Interestingly, many of the more than 60 pieces that mentioned violence in connection with TVI in Canatuan were actually reports on violence against mine workers and security personnel. All of them left out the legal and human rights concerns about TVI’s operations there. (see sidebar)

Alyansa Tigil-Mina national coordinator Jaybee Garganera compares junior mining firms to real-estate speculators. These companies, he says, buy tenements and mining applications from small Filipino ventures and then issue stocks in Canadian markets that they play up to the big companies.

The junior firms end up doing the dirty work or things that the major players would rather avoid, Garganera notes. “Initial investments…getting the endorsement of the (local government units) and the indigenous people, securing initial permits and documentation — things that big companies know will give them a hard time and may damage their image, junior companies do it,“ he elaborates.

IT’S UNCLEAR if their desire to induce the big players’ interest in their projects makes junior mining companies more vulnerable to considering quick but questionable methods to achieve their goals. Certainly, though, their relative inexperience is a minus, at least as far as some observers are concerned.

MiningWatch Canada research co-coordinator Catherine Coumans, for instance, points out that TVI’s Canatuan project was actually its first ever in any country. “They never actually planned to mine, but then they got the Canatuan property, and it was so rich, they decided hey, what the hell, why should we sell this, let’s do it ourselves,” she says. “So they’re completely making it up as they go along, never mind they have no track record…and the people are really suffering because of that.”

To which lawyer Eugene Mateo, president and director of TVI’s legal, security, and audit services retorts: “TVI has no operating mine elsewhere other than Canatuan, (but people operating the mine) had considerable experience elsewhere in the world.”

TVI ended its P25-million gold-and-silver mining project in Canatuan just last April, after close to four years of extraction. It is now focusing on mining zinc and copper from the same pit. Last November, it began its sulphide project, having completed plant and support facilities for copper-zinc production and transportation.

It actually began drilling in Canatuan in 1999, but it traces the start of its activities there to 1996. That early, the company had gotten entangled in controversy, with mining industry watchdogs wrangling with TVI over whether or not it had obtained the required consent from local authorities.

Since then, the Subanon have also become divided over whether or not TVI has been beneficial to their community, although many tribal elders are not about to be dissuaded from their belief that sacred grounds have been violated and ritual requirements had been unmet. And just like other mining operations elsewhere, TVI’s activities in Canatuan have not escaped accusations of environmental degradation.

A report by the indigenous-peoples network Philippine Indigenous Peoples Links (PIPlinks) says that in 2002, the MGB even reported that parts of Canatuan’s Siocon River had six times the acceptable level of mercury. PIPlinks notes that the agency had nevertheless regarded these levels as still not dangerous. But Timuay Jose Anoy later told PCIJ that there are people who had bathed in the river and then developed skin disease.

“’Yung mga pangingisdaan namin, wala na talaga, nasira…sa kanilang paggamit ng kemikal dun sa kanilang processing plant. (Our fishing is gone, ruined, because of the chemicals in [TVI’s] processing plant),” he added.

Coumans says that when she visited Canatuan in 2004, farmers and fisherfolk had told her that the river’s water quality had deteriorated since 2002. They had noticed unusual siltation in the river, a loss of fish fry in fish farms, sudden fish kills, and diseased fish in the river, she recalls, noting that this coincided with the time TVI began to run “large quantities of mercury bearing tailings (mine waste) through its cyanide processing plant.”

But TVI says that its mining operations have not affected the Siocon River watershed. It says that the mercury and other chemicals in the river were the result of small-scale mining that had preceded its own operations and which had ended in 2003. According to TVI, it even cleaned up the leftover small-scale mine tailings to remove the residual mercury and cyanide.

The company adds that from 2004 to April of this year, it has already spent P19 million in social development expenditures and paid P37 million to the Subanon tribal council. Aside from building schools, TVI says, it has provided health services and electrification, and sponsored a microfinance program for the community.

Glenn Noble, officer in charge of the MGB’s Mineral Economics, Publication and Information Division, says as well that Canadian mining companies like TVI not only have made significant investments in the Philippines, they have also done many capability-building projects for the government.

IN CANADA, a major association of mining companies says that of approximately 4,300 projects now being undertaken by Canadian mining firms overseas, only “15 to 20” have attracted high profile controversy.

The Prospectors and Developers Association of Canada (PDAC) adds that anti-mining groups give a distorted picture of the activity of Canadian mining companies abroad. The mining industry has a constructive relationship with development and research nongovernmental organizations (NGOs), says PDAC, but there are a number of anti-mining NGOs that “are not interested in constructive engagement and identifying effective solutions but are intent on frustrating or stopping exploration and mining projects through the dissemination of misinformation and the generation of conflict within local communities.”

PDAC complains as well that recent cases have shown that “implementing good (corporate social responsibility) practices is no guarantee that companies will avoid becoming the target of such groups and their campaigns.”

To be fair, TVI is not the only Canadian mining firm with presence in the Philippines that has attracted the ire of mining industry monitors in the Philippines and in Canada itself. So too has Crew Gold, which operates in the Philippines as Crew Development Corporation, as has Mindoro Resources Limited (MRL), with Philippine NGOs providing their counterparts in Canada with news about the companies’ activities.

Table 1: Canadian Mining Companies Operating in the Philippines
Source: MGB

(in million dollars)
Sitio Canatuan, Bgy. Tabayo, Siocon, Zamboanga del Norte TVI Resources Development Philippines Inc. 57.57
Maco, Compostela Valley Apex Mining Corp. Inc (Crew Gold) 36.58
Victoria, Mindoro Oriental Crew Minerals 1,100.09
Jabonga, Santiago, Tublay, Agusan del Norte* MRL Gold Phils., Inc. 3.15
Balabag, Bayog, Zamboanga Sibugay TVI Resources Development Philippines Inc. 2
Bgy. Camanlangan, New Bataan, Compostela Valley Philco Mining Corporation (Sur American) 5
Sitio Capcapo, Licuaan-Baay, Abra Jabel Corporation (Kadabra Mining Corp., Olympus Pacific Minerals, Inc.) 48
Bgy. Balibago, Lobo, Batangas MRL Gold Phils., Inc. 4.45
Bgy. Balibago, Lobo, Batangas MRL Gold Phils., Inc. 2.02
Camanlangan, Panay and Fatima New Bataan, Compostela Valley Philco Mining Corporation (Sur American) 0.1
Bgy. Camanlangan, New Bataan, Compostela Valley Philco Mining Corporation (Sur American) 0.1
Malimono and Mainit, Surigao del Norte MRL Gold Phils., Inc. 0.1
TOTAL 1,259.16

In 2001, the Philippine government revoked the mineral production sharing agreement (MPSA) it had granted to a Crew subsidiary in the island of Mindoro, acknowledging the need to protect critical watersheds and food security of the province. Much of the opposition to the P30-billion nickel mining project centered on a proposed Submarine Tailings Disposal (STD), where a pipeline would dispose of mine tailings into the fertile fishing grounds of Tablas Strait. This strait is also a route for migratory tuna, and whale and dolphin sightings are common there.

“The president sustained our observation that the Aglubang mining project of Crew transcends the threshold of sustainable development because of technical and social evidence,” then DENR Secretary Heherson Alvarez told reporters. He added that the president agreed with the DENR’s assessment that the project would cause “irreparable damage to the environment.”

MRL, meanwhile, has been granted an MPSA covering about 5,000 hectares in Agata, Surigao del Norte, for which the company recently secured an Environmental Compliance Certificate (ECC). It is also pursuing exploration projects in Lobo, Batangas and Pan de Azucar, Iloilo.

MRL has already made pacts with the Mamanwa and Manobo who live near its Agata nickel project. Under the agreement, MRL would pay a royalty equivalent to one percent of the gross output of any project to the tribe The company has also committed to provide skills training, employment opportunities, educational scholarships and medical services to tribe members.

The agreement also “ensures the preservation and development of the community’s culture, traditions and institutions, and the protection of burial grounds and sacred places,” according to MRL.

Unlike TVI, MRL says that it has a “harmonious relationship” with indigenous people in Agata. “We sought the help of the local government units — the mayor, the barangay captain — then we just show them our sincerity,” says MRL Vice President for Explorations Edsel Abrasaldo. “It’s easier to convince them if we tell them we’re still in exploration (and that) there will be basically almost (a) negligible effect sa environment as a matter of really convincing them.”

MRL is now concentrating wholly on its projects in the Philippines. In the past, however, it had been criticized by Canadian NGOs for sharing ownership of its Burmese project with a company controlled by Burma’s military junta. Commenting on MRL’s Agata project, MiningWatch’s Coumans says that MRL co-hosted a meeting of “very carefully selected” indigenous people from Canada “to talk to indigenous people here and advocate in favor of mining.”

The program was funded by the Canadian government, she says. But she adds, “In Canada, our government has terrible relationships with our indigenous peoples. There are blockades, there are hunger strikes, there are legal actions by our indigenous peoples against our government. So the Canadian government is not a place that should be telling anyone else what they should be doing with their indigenous people.”

IN MARCH 2007, a multisectoral advisory committee looking on Canadian mining companies with projects overseas issued its final report. The committee, which had been formed two years earlier by then Canadian Prime Minister Paul Martin, called on the Canadian government to adopt Corporate Social Responsibility (CSR) Standards, promote these through training and consultation, and establish a Compliance Review Committee as ombudsman to initiate measures against offending companies.

The committee envisioned the Canadian CSR Standards as being based on the International Finance Corporation (IFC) Performance Standards and the Voluntary Principles on Security and Human Rights. Among other things, the Canadian government would withdraw financial and insurance support, and tax savings from Canadian companies found to be in violation of CSR guidelines.

Almost two years later, however, Canada has yet to act on the committee’s recommendations. According to Coumans, while many industry groups and individual companies support the committee’s suggestions, the Canadian Chamber of Commerce and some companies have been pressuring Ottawa to water these down.

TVI Pacific Inc. corporate advisor John Ridsdel says he personally wants the Canadian government to introduce standards that “de-politicize the process of reviewing social responsibility and performance.” He stresses that TVI is making dramatic progress in responsible mining practices and sustainable development not because of any report or committee recommendations, but because the company is committed to rights-based approaches to business and development.

PDAC Executive Director Anthony Andrews, for his part, says that although the recommendations are useful, these “are very much on the conceptual level and require a lot more careful consideration as to how they would work in the real world and on a practical level.”

PDAC itself already has voluntary environmental guidelines and is drafting its own CSR framework. Andrews says that PDAC is considering whether it would be practical to development a verification system. PDAC has no disciplinary policies, he says, “because of the practical difficulties in enforcing them.”

In August 2007, the Mining Association of Canada had also announced that a rotation of one-third of its members each year would be subject to a process of third-party verification on tailings management, energy-use and greenhouse gas-emissions management, external outreach, and crisis management.

Membership in the association, however, is voluntary. At present none of the Canadian companies active in the Philippines is part of it.