1. Conference on Mining’s Impact on Philippine Economy and Ecology
we tell it like it is
Conference on Mining’s Impact on Philippine Economy and Ecology
March 2, 2012 (Friday) Grand Ballroom, Inter-Continental Manila
Peter Wallace Chairman The Wallace Business Forum

2. A CV AS A VOLUNTEER PLANTED TREES WORKED ON LAND REGENERATION
MASTER OF SCIENCE, CONSERVATION UNIVERSITY COLLEGE LONDON
BACHELOR OF SCIENCE, MAJOR IN BIOLOGY AND ECOLOGY, AND HONORS IN ZOOLOGY UNIVERSITY OF NSW, AUSTRALIA
INTERNATIONAL BACCALAUREATE DIPLOMA INTERNATIONAL SCHOOL MANILA
UNDERTAKEN ENVIRONMENTAL IMPACT ASSESSMENTS FOR INFRASTRUCTURE PROJECTS FOR GOVERNMENT AND THE PRIVATE SECTOR
AUTHORED A STUDY TO MINIMIZE IMPACT OF ROAD THROUGH WETLANDS AND MANGROVES, AND EFFECT ON MIGRATORY BIRD SPECIES, AND SIMILAR PROJECTS
AS A VOLUNTEER
PLANTED TREES
WORKED ON LAND REGENERATION
TAUGHT UNDERPRIVILEGED KIDS
PROJECT TO PROTECT SMALL ANIMALS
COMMUNITY SERVICE IN LA CARLOTA
ALL BY AGE 28

3. Mining is Unavoidable
This IS a fundamental point that cannot be ignored –
and must be taken into account:
OUR DAILY LIVES ARE DEPENDENT ON MINED PRODUCTS.
Banning mining would take us back
to Neanderthal times.
IT WOULD ALSO OPEN THE DOOR TO ILLEGAL MINING.
It is un-Christian and selfish in the extreme to say
“LET SOMEONE ELSE DO IT”.

4. dr. jose rizal saiD:
“Very probably the Philippines will defend with indescribable ardor the liberty she has bought at the cost of so much blood and sacrifice. With the new men that will spring from her bosom and their remembrance of the past , she will perhaps enter openly the road of progress with which a young man returns to cultivate his father’s farmland so long devastated and abandoned due to the negligence of those who have alienated it.
Then the mines – gold, iron, copper, lead, coal and other minerals – will be worked again and will help solve the problems of poverty.”

5. you can dig copper out of the hills.”
And even the bible in Deuteronomy Chapter 8 Verses 7-9:
“For the Lord your God is bringing you into a good land—a land with brooks, streams, and deep springs gushing out into the Valleys and hills; a land with wheat and barley, vines and fig trees, pomegranates, olive oil and honey; a land where bread will not be scarce and you will lack nothing; a land where the rocks are iron and
you can dig copper out of the hills.”
I’M PRO-ENVIRONMENT.
I FOUNDED A FOUNDATION FOR WATERSHED PROTECTION.
MY DAUGHTER IS AN ENVIRONMENTAL SCIENTIST.
BUT I MUST HAVE MINERALS IN MY LIFE.

6. …Mining is Unavoidable
The answer is to control mining –
to do the least possible damage
to support the local community
to rehabilitate the land at the end of the life of the mine
The role of everyone should be
to ensure those 3 things are done.
The solution is:
 Responsible MINING NOT BAN MINING.

7. Mining in our daily lives

8. Farming and Fishing need Mining
Mining in our daily lives
Farming and Fishing need Mining

9. Mining in our daily lives
 Radio: copper, gold, iron, petroleum
 Toaster: copper, iron, nickel, mica, chromium, petroleum
 Electrical Wiring: copper, aluminum, petroleum
 Microwave: copper, gold, iron, silica
 Stove: aluminum, copper, iron, nickel, silica Refrigerator: aluminum, copper, iron, nickel, petroleum, zinc
 Salt: halite
 Plates: clay, silica, feldspar
 Cutlery: iron, nickel, silver, chromium
 Clock: iron, nickel, petroleum, silica
⑪ Sink: iron, nickel

10. Mining in our daily lives
 Computer: gold, silica, nickel, aluminum, zinc, iron, petroleum
 Pencil: graphite, clay
 Telephone: copper, gold, petroleum
 Books: limestone, clay
 Pens: limestone, mica, petroleum, clay, silica, talc
 Film: petroleum, silver
Camera: silica, zinc, copper, aluminum, petroleum
 Chair: aluminum, petroleum
Television: aluminum, copper, nickel, silica, strontium
 Stereo: gold, iron, nickel, beryllium, petroleum
⑪ CD: aluminum, petroleum
⑫ Chest: iron, nickel,
copper, zinc
⑬ Floor: limestone
⑭ Wall: gypsum, clay, mica

11. An average car uses these metals
Mining in our daily lives
An average car uses these metals
2200 lbs. of iron & steel
240 lbs. of aluminum
50 lbs. of carbon
42 lbs. of copper
41 lbs. of silicon
22 lbs. of zinc
405 lbs. of 30 other minerals including titanium, platinum, and gold

12. Your tricycle can’t run without these metals
Mining in our daily lives
Your tricycle can’t run without these metals
iron, copper, nickel, lead, zinc, aluminum, manganese, chromium, vanadium, tungsten, platinum, gold, silver

13. Your TV works because of these metals
Mining in our daily lives
Your TV works because of these metals
IRON: electronics, screws, brackets
LEAD & TIN:
circuit boards
ALUMINUM:
brackets, heat sinks
COPPER:
circuit boards, wires
GOLD:
Integrated circuits

14. An average cellphone contains
Mining in our daily lives
An average cellphone contains
58% plastics
made of petroleum
2% silver, gold, palladium, platinum
16% ceramics made of silica
24% copper

15. Mining in our daily lives
WE NEED A METAL SEWING MACHINE
WE NEED A METAL CLOTH PRODUCTION MACHINE
WEAVING ON A WOODEN WEAVE IS OK IF THERE ARE 100-M PEOPLE IN THE WORLD

16. The Church uses products of Mining So we must have mining in our lives
Mining in our daily lives
The Church uses products of Mining
So we must have mining in our lives

17. OVER THE PAST 20 YEARS THE PHILIPPINES HAS BEEN THE POOREST PERFORMER
PERFORMANCE IN ASEAN
ESTIMATED PROPORTION OF POPULATION LIVING BELOW $1.25/DAY (IN PPP)
Philippines
WE HARDLY MADE A DENT ON POVERTY UNLIKE OUR NEIGHBORS
2.3 MILLION FAMILIES ALREADY ON CCT BECAUSE THERE ARE NO JOBS
INDONESIA EMPLOYS 1.5M IN MINES
THE PHILIPPINES ONLY 340,000

18. THE PHILIPPINES RANKS HIGH IN THE WORLD ON MINERAL RESOURCES RESERVES
MINERAL ORE
GLOBAL RANK
ESTIMATED RESERVES (TONS)
GOLD
3RD
5 BILLION
COPPER
4TH
8 BILLION
NICKEL
5TH
0.8 BILLION
CHROMITE
6TH
40 MILLION
INVESTMENTS FROM PROJECTED TO REACH $15-B
WILL HAVE 3% SHARE TO GDP BY 2018
MINING CAN PROVIDE THE BOOST THE ECONOMY NEEDS
TOTAL REVENUES $43-B, 3% OF GDP BY 2018

19. SHARE OF MINERAL EXPORTS TO TOTAL ANNUAL EXPORTS (%)
Philippines
Peru
Chile
Brazil
S. Africa
Vietnam
India

20. OVER THE NEXT 5 YEARS WE EXPECT
THE PHILIPPINE ECONOMY TO GROW AT AN AVERAGE OF 5.5%
GDP GROWTH FOR THE PAST 25 YRS
GOV’T CAN EASILY RAISE GDP GROWTH TO AT LEAST 6.5% P.A. BY SPENDING MORE ON INFRA AND SUSTAINING THE ANTI- CORRUPTION STANCE.
THAT’S ASSUMING EVERYTHING CONTINUES ON THE CURRENT TRACK.
BUT MINING CAN BE A GAME-CHANGER.
TAMPAKAN ALONE CAN ADD 1% AGE POINT TO GDP GROWTH

21. MINING GETS FULL GOVERNMENT SUPPORT AND FAST ACTION ON APPROVALS ETC.
WE CAN LOOK AT 2 SCENARIOS
AWAITING THE MINING SECTOR:
SCENARIO 1
MINING GETS FULL GOVERNMENT SUPPORT AND FAST ACTION ON APPROVALS ETC.
WHILE THE OPPOSITION REALIZES THEIR ROLE IS TO HELP CONTROL, NOT BLOCK MINING.
INVESTORS PUT REAL MONEY IN

22. THEN WHAT HAPPENS?
SUSTAINABLE, WORLD’S BEST PRACTICE MINING – UNDER CLOSE MONITORING OF FORMIDABLE WATCHDOGS
AT LEAST 112,000 MORE DIRECT JOBS FROM $15-B INVESTMENTS: JOBS THAT PAY WELL, GET WORKERS’ KIDS TO SCHOOL, & ENSURES WORKERS’ FAMILIES DON’T GO HUNGRY
ROADS, SCHOOLS & HOSPITALS BUILT IN REMOTE AREAS
ELECTRICITY AND WATER COME TO THE VILLAGE
GDP GROWS AT 7-8% P.A., NOT 5.5%
WE BREAK THE POVERTY TRAP

23. THEN WHAT HAPPENS? GOVERNMENT CONTINUES TO DILLYDALLY & FLIP FLOP
SCENARIO 2
GOVERNMENT CONTINUES TO DILLYDALLY & FLIP FLOP
OPPOSITION SUCCEEDS IN BLOCKING DEVELOPMENT
THE OPEN PIT BAN STAYS, EVEN EXPANDS
INVESTORS LEAVE
THEN WHAT HAPPENS?
INFORMAL, SMALL- SCALE MINING TAKES OVER
DISASTERS CONTINUE AND MINING COMMUNITIES REMAIN POVERTY-STRICKEN
JOBS AREN’T CREATED, SUPPORT SERVICES DON’T HAPPEN
ECONOMY SUFFERS, GDP TRICKLES ALONG AT 3.5-4%

24. WHY IS RESPONSIBLE MINING BENEFICIAL?
CONTRIBUTES TO GROWTH OF LOCAL AND NATIONAL ECONOMY
Investing capital and re-investing profit in the country
Revenue generation through taxes
Utilization of local goods and services
Additional employment in rural areas
Improvement of infrastructure (roads, power and water systems, buildings)

25. 2. IMPROVES THE QUALITY OF LIFE ESPECIALLY IN RURAL AREAS
Provides infrastructure for community dev’t (roads, housing)
Provides access to hospitals and other healthcare facilities
Brings in quality education in remote areas
Implements social management and dev’t programs

26. IT’S SMALL SCALE THAT DOESN’T DO ANY OF THIS
3. SUPPORTS THE ENVIRONMENT
Implements best and sustainable environmental practices in mining
Carries out progressive mine rehabilitation
Builds structures that prevent disasters and environmental degradation
Fully rehabilitates the area at the mine’s end
IT’S SMALL SCALE THAT DOESN’T DO ANY OF THIS

27. THE PHILIPPINES HAS THE LOWEST LEVEL OF PERSONAL WEALTH
COUNTRY
2010 GDP per CAPITA (US$)
INDONESIA
4,200
VIETNAM
3,100
PHILIPPINES
2,200
MINING CONTRIBUTION TO GDP (%)
Indonesia
MINING IS NOT THE ONLY REASON, BUT IT’S CERTAINLY A MAJOR REASON.
Vietnam
Philippines

28. MINING WEALTH OF THE COUNTRY IS ESTIMATED TO BE AT $840 BILLION OR P47 TRILLION (4 TIMES THE ANNUAL GDP)
BUT THE PHILIPPINES ACCOUNTS FOR LESS THAN 3% OF WORLD MINERAL SUPPLY DESPITE BEING RICHLY ENDOWED WITH RESOURCES.
SAUDI ARABIA IS RICH BECAUSE IT HAS OIL AND PUMPS IT OUT OF THE GROUND TO SELL IT.
THE PHILIPPINES IS POOR BECAUSE IT HAS GOLD IN THE GROUND – AND LEAVES IT THERE.

29. THE CONTRIBUTION OF MINING TO THE ECONOMY CAN’T BE DENIED
PERCENT SHARE OF MINING TO TOTAL EXPORTS SINCE 1975
IN THE 1970’S, MINERAL EXPORTS PEAKED &
CONTRIBUTED 24% TO TOTAL EXPORTS.
MINERAL EXPORTS IN 2011 AMOUNTED TO A MERE $2 BILLION
IT’S A MERE 5% OF EXPORTS TODAY.
IF IT HAD CONTINUED AT 20%, IT WOULD HAVE BEEN $9-B

30. EMPLOYMENT IN MINING AND QUARRYING (IN THOUSANDS)
JUST FOR THE 1ST 3Q OF 2011, LARGE-SCALE METALLIC MINING EMPLOYED 220,000
TOTAL EMPLOYMENT IN METALLIC AND NON-METALLIC MINING IS AROUND 340,000.
THEN ADD TO THAT ALL THE EMPLOYEES OF SUPPORT SERVICES AND SUPPLIERS, PROBABLY RUNS TO ≈2 MILLION

31. MINING EMPLOYS 220,000 ON 60,000 HAS. = 0.2% LAND MASS
AGRICULTURE EMPLOYS 12M ON 9.6M HAS. = 32% LAND MASS
ON A PER HECTARE BASIS:
MINING EMPLOYS 4 PERSONS/HA. WHILE
AGRICULTURE EMPLOYS 1 PERSON/HA.
AVE. MINING WAGE (rank and file)* : P550/day = P2,200/ha.
VS.
AVERAGE FARMER INCOME**: P260/day = P260/ha.
PEOPLE-WISE WHICH IS THE BETTER LAND USE?
*data from a responsible mining firm
**from National Wages and Productivity Commission; ave. among regions

32. No Operating Mines are located in these Provinces!
10 Largest Rice Producers
in the Philippines (in tons):
Nueva Ecija , 356, 161
Isabela , 036, 917
Pangasinan , 011, 115
Iloilo , 376
Cagayan , 561
Leyte , 890
Camarines Sur , 889
Tarlac , 943
North Cotabato , 202
Maguindanao , 766
No Operating Mines are located in these Provinces!
Operating Mines
Major
Rice Producers

33. A TYPICAL MPSA COMPANY OR PROJECT ALREADY CONTRIBUTES ABOUT 43
A TYPICAL MPSA COMPANY OR PROJECT ALREADY CONTRIBUTES ABOUT 43.7% OF ITS REVENUES TO THE PUBLIC SECTOR
AND WITH ROYALTIES, IT CAN GO AS HIGH AS 52.8%
ASIDE FROM TAXES, THE PUBLIC SECTOR ALSO BENEFITS FROM OTHER FORMS OF CONTRIBUTIONS OF RESPONSIBLE MINING COMPANIES TO THE ECONOMY

34. THE MUNICIPALITY OF SIOCON HAS GONE FROM CLASS 4 TO CLASS 1
FOR EXAMPLE:
 CONTRIBUTIONS OF TVI PACIFIC INC.
Million (PHP)
Roads 94
Employment
413
Property Rights of Subanen 40
Water 1
Education 23
Training-capacity, agriculture, crafts, apprenticeship, on-the-job 14
Health facilities and medical personnel, ambulance 37
Transportation-to market, work 10
Environmental cleanup 2003 (pre-project)-SSM mercury, cyanide 24
Taxes and royalties - municipal, excise, royalty to Subanen, royalties to rights owner
537
TOTAL
1.2 BILLION
THE MUNICIPALITY OF SIOCON HAS GONE FROM CLASS 4 TO CLASS 1

35. TOTAL TAX RATE BY REGION
TOTAL TAXES AS % NET INCOME
FURTHER RAISING TAX RATES WILL RENDER THE COUNTRY EVEN LESS COMPETITIVE THAN IT IS NOW
Data for Philippines are based on an actual MPSA company
Source: Data on OECD, Africa & Latin America were sourced from PWC Global Study on Total Tax Contribution of Mining

36. PH VS. INDONESIA (MINING TAXES)
PHILIPPINES
INDONESIA (1)
Type of Metal
All
Copper
Gold
Nickel (2)
1) Income Tax
30%
25%
Taxes/Fees/Royalties (3)
Excise Tax (4)
2.0%
4.0%
3.75%
5.0%
Business Tax (5)
1.5%
N/A
 In Mineral Reserve
Add: Mineral Reserve Royalty
 In Ancestral Land
Add: Royalty to IPs
1.0%
2) Total
9.5%
Notes:
1. Assumes publicly listed company; royalty rates following approval of Regulation No. 9, 2012.
2. Royalty is applicable to Nickel Ore; Nickel Matte is taxed at 4%.
3. Based on Gross Output.
4. Royalty in the case of Indonesia.
5. Assumes municipalities charge at the maximum allowable rate of 70% of 2% as per Sec. 143 (h) of the Local Gov't Code; the 30% balance is charged at the rate applicable in Makati.

37. THE TAMPAKAN PROJECT
ONE OF THE LARGEST UNDERDEVELOPED COPPER-GOLD PROJECTS IN THE WORLD
A $5.9 BILLION INVESTMENT – LARGEST EVER FDI
WE ONLY ATTRACTED ABOUT $1.7 BILLION IN 2010 AND UNDER $1-B LAST YEAR!
OVER 5 YEARS IT WOULD PAY:
P250B IN NATIONAL TAXES P95B IN LOCAL TAXES
IT WOULD ADD 10.4% TO RGDP
OVER 20-YEAR LIFE, PAY $7.2-B TO GOVERNMENT
=P15 BILION PER YEAR

38. THE TAMPAKAN PROJECT
REGIONAL INCOME WILL INCREASE FROM ADDITIONAL EMPLOYMENT
ABOUT 10,000 JOBS DURING PEAK OF CONSTRUCTION PHASE
AND 2,000 JOBS DURING OPERATIONS PHASE
BETWEEN 12% AND 130% INCREASE IN AVERAGE PER CAPITA INCOME IN HOST VILLAGES
UP TO P250-M P.A. IN HOST VILLAGES
UP TO P120-M IN OTHER VILLAGES IN HOST MUNICIPALITIES
UP TO P265-M IN OTHER MUNICIPALITIES IN HOST PROVINCES
Source: David Pearce
Centre for International Economics

39. IN THE FRASER INSTITUTE ANNUAL SURVEY OF MINING COMPANIES, PHILIPPINES IS IN THE BOTTOM 10
HOWEVER THE COUNTRY WOULD PLACE 7TH – FROM THE TOP – ASSUMING A “BEST PRACTICES” POLICY REGIME
2008/2009
2009/2010
2010/2011
2011/2012
OVERALL RANK AS DESTINATION OF MINING INVESTMENTS 59 70 66 88
NO. OF COUNTRIES SURVEYED 71 72 79 93
RANK BASED ON PURE MINERAL POTENTIAL(ASSUMES A “BEST PRACTICES” POLICY REGIME) 11 33 19 7
THUS, INVESTMENTS WOULD COME IN IF
THE GOV’T ADOPTED MARKET-ENABLING POLICIES

40. RESPONSIBLE MINING, NOT BAN MINING.
AGAIN, THE SOLUTION:
RESPONSIBLE MINING, NOT BAN MINING.
WHAT IS NEEDED IS REGULATORY CHANGES THAT WILL ADDRESS THE REAL PROBLEMS IN THE INDUSTRY.
AND EFFECTIVE IMPLEMENTATION OF THEM.
PUT SMALL SCALE MINING UNDER NATIONAL CONTROL.
ENSURE THEY ACT RESPONSIBLY SO AS TO MINIMIZE HARM TO THE ENVIRONMENT
STOP THEIR USE OF MERCURY
REQUIRE THEM TO PAY TAXES
SELL THEIR GOLD TO THE BSP – AS MANDATED
STOP ILLEGAL EXPORT

41. 2. STRENGTHEN THE CAPABILITY OF DENR AND MGB TO PROPERLY AND FULLY MANAGE MINERALS DEV’T – BY BOTH SMALL AND LARGE-SCALE MINES. AND FUND IT ADEQUATELY.
3. LOCAL LAWS CANNOT BE ALLOWED TO OVERRULE NATIONAL LAW. ANY BAN OR CONTROL IN A PARTICULAR AREA MUST COME FROM THE NATIONAL GOV’T AND BE IN LINE WITH NATIONAL LAW.
4. SHARE OF REVENUES TO GOV’T MUST BE FAIR. BUT MUST KEEP THE COUNTRY COMPETITIVE WITH OTHERS TO MAINTAIN INVESTOR CONFIDENCE & INTEREST.

42. 5. ANY CHANGE CANNOT BE RETRO-ACTIVE, AND MUST RESPECT INTERNATIONAL TREATIES. GRANTED AGREEMENTS MUST BE HONORED.
6. THE ENVIRONMENT MUST BE PROTECTED – BUT IN A REALISTIC FASHION. MINES MUST PROGRESSIVELY RESTORE THE LAND AND DO A FULL REHABILITATION AT THE END OF THE MINE’S LIFE. RESPONSIBLE COMPANIES WILL.

43. Mining is Unavoidable THANK YOU.
This is a fundamental point that cannot be ignored –
and must be taken into account:
OUR DAILY LIVES ARE DEPENDENT ON MINED PRODUCTS.
SO WE HAVE TO CONTROL, NOT BAN.
LET US WORK TOGETHER ON CONTROL.
THANK YOU.