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Many communities in the Philippines suffer the disastrous effects of open-pit mining. At least 75% of mining corporations audited by the Department of Environment and Natural Resources (DENR) in 2016 employed open-pit mining methods for extracting copper, gold, nickel, and chromite¹. From 2017 to 2021, several open-pit mining exploration permits and all other pending applications were suspended as a result of the mine audit, which found widespread violations of environmental and social standards in a majority of existing open-pit sites².

Open-pit mining is a type of mining operation that involves removing large amounts of earth to access deposits of valuable minerals or ore and remains to be the most widely employed method for mineral extraction in the Philippines. While the mining industry promises that mineral extraction is an important source of income and economic development for a community, open-pit mining has been proven to be associated with several negative impacts.

Communities witnessed how open-pit mining largely contributed to destruction of the local environment. To access the minerals or ore, large amounts of topsoil and underlying earth must be removed. This results in air, water, and noise pollution, as well as damage to habitats and ecosystems. This has a range of negative consequences for the local flora and fauna, and results in the loss of essential resources like timber, arable land, and clean water. This was clearly demonstrated by the1996 Marcopper disaster in Marinduque which annihilated the biosphere of the Boac River and the flooding of twenty villages due to polluted water from mine tailings contaminating the river basin³. In Manicani, the waste produced by the Hinatuan Mining Corporation's nickel mine led to environmental degradation via polluted water due to excessive soil extraction and rain run-off⁴.

In addition to environmental impacts, open-pit mining also has social and economic impacts on the local community, such as public health.  The noise, dust, and other forms of pollution triggered by mining operations have been linked to respiratory and other illnesses as well as water-borne diseases from polluted water. In Sta. Cruz, Zambales where four major nickel mining companies were suspended in 2014 for violations of environmental regulations⁵, there were noted instances of acute upper respiratory infections, skin rashes, and several other diseases among mining-affected communities⁶. As such, mining-affected communities have specific medical and other health needs that arise because of their direct and indirect exposure to mining operations’ hazards and other impacts.  This requires access to services that address, among others, the specific health impacts of pollutants created by the mining operations. 

Due to the location-specific nature of the extractive industry, mining operations strike deep into remote areas where mineral and other natural resources are most rich and where communities’ livelihoods and cultures are defined by their close affinity to the natural environment. These communities, however, have historically been among the most marginalized from the centers of political power and economic decision-making, and have had to survive with the least access to public services and other support systems, including basic medical care and preventative health services, such as vaccinations and screenings. Region IVB (MIMAROPA), home to some of the largest mining operations such as the Rio Tuba Nickel Mining Corporation in Palawan and previously Marcopper in Marinduque, is the region with one of the lowest doctor-to-patient ratios (1.8/10,000) and hospital bed-to-patient ratios (1/10,000) in the country. These figures fall drastically below the 10/10,000 ratio prescribed by the World Health Organization⁷. In addition, the health spending of provinces affected by mining decreased from 21.43% of their total operating expenses in 2005 to only 16.1% in 2010 despite the generally upward trend of mining output in this period⁸.

As it stands, mining does little to improve the social and economic health of these communities. Indeed, mineral-rich communities have historically been deprived of access to public services such as electrification, schools, and hospitals. This lack of access is compounded and further compromised by the impact of mining on the land and water resources of these communities through mining pollution, affecting agricultural livelihoods. In Didipio where mining operations of Oceana Gold Inc. (OGI) take place, households are estimated to only utilize 0.4% of the water resources used by corporations in the Didipio Mine⁹. 

Public Services Essential to Communities’  Health and Resilience 

To mitigate the effects of pollution caused by open-pit mining, the government must urgently  provide public services such as clean drinking water, health care, and education to mining-affected communities. 

Much of this damage co-occurs with the continuation of mining operations, hence communities’ call to halt mining activities in severely impacted areas. The Writ of Kalikasan¹⁰ is an important legal tool in this regard, as used successfully by the Concerned Citizens of Santa Cruz Zamboanga against five mining corporations in 2016. The issuance of the Writ urged the court to suspend mining operations in the area to halt immediate damage to the water sources¹¹.  

Likewise, if the mining operations result in air or water pollution, it is essential to prioritize ecological restoration to help protect the health and well-being of the community. As it stands, there is a lack of sufficient recognition of ecological destruction by government or the culpability of this destruction by large mining corporations. Mining companies must account for the costs of community rehabilitation and ecological restoration.

Not only do public services mitigate immediate impacts, they also build or restore communities’ resilience, including abilities to sustain livelihoods in the long run. Providing access to education and jobs, as well as subsidies for local businesses, helps to ensure that members of the community are equipped to participate in the local economy and prioritize ecological restoration. 

However, public education and job trainings mean little if the land becomes unusable for economic development. This was indeed the case in Tampakan, South Cotabato, where mining waste from tailing ponds threatened the fecundity of local farmlands and the viability of the tuna industry in General Santos¹². Philippine provinces hosting large-scale mining operations are among those with the highest poverty incidence with at least 30% of their population living below the poverty line, with the exception of provinces that have diversified economic activities beyond mining¹³. Hence, it is necessary to prioritize the preservation of land and water resources such as agriculture and fisheries that are independent of mining activities.

Gender-responsive public services must also be in place for women in mining-affected communities. Access to reproductive health care and family planning services, as well as support for maternal and child health are often out of reach in rural mining areas. Women in communities affected by mining tend to carry the responsibility of providing food for their families and therefore need access to food sources, which can be severely compromised by the impacts of open-pit mining on agricultural lands. Chemicals used in the mining process leeches into the soil and contaminate local crops, making them unsafe for food consumption. Similarly, water pollution increases the difficulty for women to access clean water for irrigation, cooking, and drinking, and impacts the availability of local fruits, vegetables, and other food sources.

Increased vulnerabilities to natural disasters and Irreversible Effects of Mining

Mining-affected communities are also more vulnerable to natural disasters and require specific disaster risk management services. Open-pit mining creates risks of landslides, flash flooding, and other natural disasters that occur with heavy rains or earthquakes because forests absorb and retain a lot of water and open-pit mining destroys an environment’s ability to absorb water through the destruction of the forest and compromising soil integrity. These vulnerabilities are first and foremost caused by the open-pit method itself. Hence, many communities advocate for the reduction or cessation of these operations to alleviate these vulnerabilities. 

However, restoration may even be more challenging, if not impossible, for areas with  long-term exposure to open-pit mining or other irreversible effects of mining. In a number of high-profile cases, mining results in the complete destruction of the local environment, making it difficult or impossible to restore the area to its previous natural state. In other cases, the damage may be more limited, but can still be significant, requiring large-scale restoration efforts. The restored environment may also be vulnerable to future damage from other human activities, such as logging or development. Hence, communities in these areas demand rehabilitation and ecological restoration as urgent measures that governments must compel mining corporations to undertake.

Mitigating Mining’s Social Impacts and Economic Deficits Through Tax Justice

There is a need to systematically address mining’s social and environmental impacts through stricter regulation of the industry and comprehensive provision of public services. Mining companies should be made to pay for rehabilitation and compensation for social and ecological damages.  Mining profits should be taxed fairly and justly to raise the countries’ domestic revenues.    

All in all, the scale of the extractive industry’s environmental impacts and communities’ heightened vulnerability to poverty, food insecurity, and ecological risk underscore the critical importance of tax justice in the extractives sector. In the Philippines, the miniscule contribution of the extractives sector to the economy and employment sharply contrasts with the profits enjoyed by corporations. These issues to an environment where financial secrecy and regulatory loopholes in the taxation system enable large-scale tax avoidance.

Instead of plugging the leaks and addressing tax abuses by corporations, the Philippine government itself allows for large-scale revenue erosion in the sector through its provision of tax incentives in mining permits. Fiscal devolution where several layers of taxation operate from the local to the national level has also provided corporations the leeway to skirt tax obligations, and engendered legal challenges by local governments over taxing rights and revenue management.

Meanwhile, resources available for public services and addressing impacts of mining for affected communities are severely limited. Municipalities affected by mining were found to utilize and depend on tax revenues from mining to fund as much as 43% of their annual budgets¹⁴. As such, mining corporations’ repeated attempts to dodge taxation through challenging tax claims of local governments in court as in Nueva Vizcaya¹⁵ and South Cotabato¹⁶ gravely impede the provision of public services in communities most directly affected by extractives activities. To address the multiple crises faced by mining-affected communities, it is imperative that corporations are sanctioned to pay for the impacts and damages caused by mining and their just share of taxes to fund the provision of public services.

At the end of the day, the extractive industry impacts mining-affected communities’ ability to enjoy their right to access to quality public services many times over: firstly, by exposing communities to health hazards and other risks; secondly, by negatively impacting livelihoods and access to water and other natural resources which in turn increases their social and economic vulnerabilities and abilities to access affordable social services; and thirdly, because the foregone revenues lost to the extractive industry’s profit shifting and the tax incentives they enjoy, the public financing of social services for the entire country is also severely compromised. 

Moving forward, addressing deficits in public services due to extractives activities requires transformative and multi-level policy reforms on the local, national, and global levels. The national government must proactively strengthen tax enforcement to make corporations pay their just share and ensure that mining tax revenue-sharing is made fairer, reducing the burden on local governments to generate revenues. There must also be efforts towards improving financial transparency in extractives on the local level, involving communities in reporting and analysis, on the national level through a stronger and public beneficial ownership registry, and on the global level through ensuring that developing countries like the Philippines are able to access automatic exchange of information (AEOI) and be able to work with other countries affected by extractives activities to curb transfer-pricing and other illicit financial flows (IFFs) in the sector through a democratically negotiated tax convention at the United Nations.

Endnotes:

1 Mining Industry Coordinating Council, “Review of Philippine Large-Scale Metallic Mines: Going Beyond Compliance Towards Sustainability” MICC Policy Note, Vol. 1 No. 1, April 2022, https://www.dole.gov.ph/php_assets/uploads/2022/06/MICC-Mining-Policy-Note-Online-Version.pdf

2 Keith Schneider, “Philippines bans new open-pit metal mines,” Mongabay, April 28, 2017, https://news.mongabay.com/2017/04/philippines-bans-new-open-pit-metal-mines/

3 Gwen de la Cruz, “Look Back: The 1996 Marcopper Mining Disaster,” Rappler, March 24, 2017, sec. MovePH, https://www.rappler.com/moveph/165051-look-back-1996-marcopper-mining-disaster/.

4 PNA, “Hinatuan Mining Told to Stop Transporting Nickel Ore Stockpile,” SUNSTAR, July 21, 2016, https://www.sunstar.com.ph/article/87093/hinatuan-mining-told-to-stop-transporting-nickel-ore-stockpile.

5 “4 mining firms suspended over ‘unsystematic’ methods”. Rappler. July 24, 2014. https://www.rappler.com/business/industries/64247-4-mining-firms-suspended-unsystematic-methods/

6 Anniebeth N. Farin, “The Health Problems of the Residents in the Mining-Affected Areas in Santa Cruz, Zambales, Philipp by Iaset Journals,” International Journal of Humanities and Social Sciences 7, no. 6 (November 2018): 23–36.

7 UP COVID-19 Pandemic Response Team, “Estimating Local Healthcare Capacity to Deal with COVID-19 Case Surge: Analysis and Recommendations,” University of the Philippines, April 20,2020, https://up.edu.ph/estimating-local-healthcare-capacity-to-deal-with-covid-19-case-surge-analysis-and-recommendations/

8 Magno, Cielo (2016) “Extractive industries and the financing of child-inclusive social development in the Philippines: Trends and policy frameworks,” UNRISD Working Paper, No. 2016-2, United Nations Research Institute for Social Development (UNRISD), Geneva, https://www.econstor.eu/handle/10419/148754

9 Magno, Cielo and John Christopher Lawrence Morillo, “Case studies on the water use of large scale mining in the Philippines,” UPSE Discussion Paper No. 2019-03 https://econ.upd.edu.ph/dp/index.php/dp/article/view/1522

10 The Writ of Kalikasan is a legal remedy that seeks to protect citizens and communities against acts that damage the environment, as guaranteed by the Philippine Constitution in recognition of the “right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature” (Article II, Section 16 of the 1987 Constitution)

11 Sunnex, “SC Issues Writ of Kalikasan vs 5 Mining Firms,” SUNSTAR, September 29, 2016, https://www.sunstar.com.ph/article/81424/sc-issues-writ-of-kalikasan-vs-5-mining-firms.

12 Justice and Peace Desk, Social Action Center, Diocese of Marbel, “Mining in the Municipality of Tampakan: Risks and Alternatives,” https://www.slideshare.net/no2mininginpalawan/mining-in-the-municipality-of-tampakanrisks-and-alternatives.

13 Magno, Cielo (2016) “Extractive industries and the financing of child-inclusive social development in the Philippines: Trends and policy frameworks,” UNRISD Working Paper, No. 2016-2, United Nations Research Institute for Social Development (UNRISD), Geneva, https://www.econstor.eu/handle/10419/148754

14 Ibid.

15 John Victor D. Ordonez, “Tax court denies OceanaGold’s appeal to review liabilities,” BusinessWorld, June 7, 2022, https://www.bworldonline.com/corporate/2022/06/07/453185/tax-court-denies-oceanagolds-appeal-to-review-liabilities/

16 Bong S. Sarmiento, “Tampakan mine operator raps LGU over tax demand”, INQUIRER.Net, September 15, 2022, https://newsinfo.inquirer.net/1664417/tampakan-mine-operator-raps-lgu-over-tax-demandi

Renewing efforts to bring national gov’t debt under public scrutiny and shift payments away from questionable loans to support people’s needs and survival   

Manila, February 21, 2023  “Audit the debt now! Repeal the Automatic Appropriations Law” 

The call to examine the public debt  – a legacy of debt dependence by the Marcos Sr. administration and carried through by successive Philippine administrations – echoed from leaders and respected individuals coming together as a commission for  the Philippine Citizens Debt Audit. 

The national government debt now stands at P13.5 trillion, as last reported by the Bureau of Treasury. Through the Citizens Debt Audit, the commissioners aim to empower Filipinos to dig into our public debt, disentangling the web of unsustainable debt levels and the burden they impose on ordinary citizens. 

Launched in Quezon City to examine the increasingly ballooning public debt of the country, they also pressed for the repeal of a Marcos Sr. law that allows automatic appropriation of funds for debt service, without benefit of public consultations and regardless of more urgent survival needs today of the Filipino people

Dr. Rene Ofreneo, current president of the Freedom from Debt Coalition (FDC) and Professor Emeritus of the UP School of Labor and Industrial Relations scored the Automatic Appropriations policy for curtailing citizens’ rights to information and participation in debt governance and management. “These public debts were and continue to be incurred in the name of the Filipino people. We are also the ones shouldering debt service payments, whether through taxes or cuts in public expenditures for health, education, job creation and other needs. Yet, we only get to know what debts were contracted after the deed is done, and then bear the consequences for debt-funded projects that may have violated human rights or destroyed environments.”

“Debt audits are critical towards shaping and transforming policies on outstanding debts and debt payments,  as well as borrowing policies. They can also serve as bases to call for changes in the policies of  lenders, ” said Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD). “Filipinos are struggling to survive in the face of multiple crises. Examining the public debt through a  debt audit can identify loans that should not be paid, and open opportunities for shifting public money from debt service to people’s needs especially in these extremely difficult times.”  

UP Professor Emeritus of Asian Studies Dr. Eduardo Tadem, former FDC president, shared the challenges and gains of the coalition in undertaking a Citizens Debt Audit and pushing for an Official Debt Audit. He noted milestones following years of debt audit campaigning, such as the inclusion of a special provision in the 2017 General Appropriations Act (GAA) signed by former President Duterte in December 2016 “to conduct a debt audit to determine the legitimacy” of 20 government-contracted foreign loans from the Asian Development Bank, World Bank and other lenders. These were among 481 outstanding foreign loans that were supposed to be probed under the Hontiveros-Pimentel initiative.

However, these efforts did not progress further for various reasons, notably the lack of political will, according to Tadem. He cited the veto powers of the President, which then President Gloria Macapagal-Arroyo exercised over a GAA special provision that would have suspended debt service for 13 foreign loans that the FDC called “illegitimate” or “fraudulent, wasteful, and/or useless.” Tadem said that “this is exactly why a Citizens Debt Audit is vital, for Filipinos to have  the space to assert their democratic rights to information, to ask questions and be informed to take active part in policy-making on an issue that impacts their daily lives and their future. We need sustained public pressure to push for an official debt audit.” 

As an example of a questionable loan, SANLAKAS Secretary General Atty. Aaron Pedrosa, presented the case of the New Centennial Water Source-Kaliwa Dam Project (NCWS-KDP), funded by a loan agreement with onerous conditions. These include costly repayment terms and a waiver of immunity by the Philippine government in case lenders file for arbitration. “This practically holds our sovereignty hostage,” said Pedrosa who further cited irregularities in the issuance of the Environmental Compliance Certificate (ECC) by the Department of Environment and Natural Resources and the Certificate Precondition issued by the National Commission on Indigenous People. 

The controversial NCWS-KDP was initiated as a PPP project during the term of Pres. Benigno Aquino III but was later converted to an official development assistance (ODA) project by the Duterte administration with the Export-Import Bank of China providing funding for 85 percent of the project cost through a bilateral loan. Atty. Pedrosa is co-counsel of the petition for environmental protection filed by indigenous peoples to stop the construction of the Kaliwa Dam Access Road Project. The  access road was found in violation of legal requirements and laws protecting the Dumagat-Remontado ancestral domain.

The commissioners plan to hold public consultations and publish reports in the coming months. In addition to Nacpil, Ofreneo, Tadem and Pedrosa, commission members include Bishop Gerardo Alminaza  (Co-convenor, Withdraw from Coal Coalition); Maria Rosario Ballescas (Coordinator, Regional Center of Expertise on Education for Sustainable Development); Leody de Guzman (Chairman Emeritus, Bukluran ng Manggagawang Pilipino); Manuel Montes (Senior Advisor, Society for International Development); Maria Dulce Natividad (UP Asian Center Associate Professor); Eribert Padilla (Certified Public Accountant); Loretta Ann Rosales  (Chairperson Emeritus, AKBAYAN Citizens Action Party); Flora Santos (President, Oriang national women’s movement) and Zyza Nadine Suzara (Executive Director, Institute for Leadership, Empowerment, and Democracy or I-Lead).

###

Contact:

Mae Buenaventura - APMDD

Rovik Obanil - FDC

"We believe that debt transparency should apply to all debt instruments and countries, regardless of income levels... For certain, borrowing governments should be held responsible for contracting and accumulating burdensome and illegitimate debts. But transparency is just as wanting among lenders. In many instances, the weight of culpability and accountability rests primarily and heavily on lenders."

The message expressed by APMDD at the 13th UNCTAD Debt Management Conference held in Geneva last Dec. 5-7 drove home a key critique of lenders demanding debt transparency on the part of borrowers while conveniently excusing themselves from their own guidelines. 

APMDD was represented by Mae Buenaventura of the Debt Justice Program in the panel that  included Riccardo Boffo, Economist and Financial Analyst (OECD); Yuefen Li, Senior Adviser, South-South Co-operation and Development Finance (South Centre); and Sonja Gibbs, Managing Director and Head of Sustainable Finance, Institute of International Finance (IIF).

The Conference is held regularly as a biennial forum for sharing experiences and exchanging views between governments, international organizations, academia and civil society on debt-related developments in developing countries and on debt management issues in the broader macroeconomic context.

The most recent effort proceeds from the OECD Debt Transparency Initiative which  principles drafted without public consultations by the IIF, a group for the financial industry and composed of the world's largest commercial and investment banks. International financial institutions such as the International Monetary Fund and the World Bank, the G20 and the OECD promote these guidelines, ignoring other sets of principles already in place. These include the UNCTAD Principles on Promoting Responsible Sovereign Lending and Borrowing which benefitted from broad participation and consultation with civil society, among them APMDD, media, academe and other stakeholders.  

Read the full intervention here.