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MINING CHART 1 MARCH 1, 2012 Conference on Mining’s Impact on Philippine Economy and Ecology March 2, 2012 (Friday) Grand Ballroom, Inter-Continental Manila.

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Presentation on theme: "MINING CHART 1 MARCH 1, 2012 Conference on Mining’s Impact on Philippine Economy and Ecology March 2, 2012 (Friday) Grand Ballroom, Inter-Continental Manila."— Presentation transcript:

1 MINING CHART 1 MARCH 1, 2012 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 we tell it like it is

2 MINING CHART 2 MARCH 1, 2012 A CV 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 CHART 3 MARCH 1, 2012 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 MINING CHART 4 MARCH 1, 2012 “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.” DR. JOSE RIZAL SAID:

5 MINING CHART 5 MARCH 1, 2012 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 CHART 6 MARCH 1, 2012 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. …MINING IS UNAVOIDABLE

7 MINING CHART 7 MARCH 1, 2012 Mining in our daily lives

8 MINING CHART 8 MARCH 1, 2012

9 MINING CHART 9 MARCH 1, 2012  Clock: iron, nickel, petroleum, silica ⑪ Sink: iron, nickel  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

10 MINING CHART 10 MARCH 1, 2012  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 Mining in our daily lives  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 MINING CHART 11 MARCH 1, 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 MINING CHART 12 MARCH 1, 2012 iron, copper, nickel, lead, zinc, aluminum, manganese, chromium, vanadium, tungsten, platinum, gold, silver

13 MINING CHART 13 MARCH 1, 2012 IRON: electronics, screws, brackets LEAD & TIN: circuit boards COPPER: circuit boards, wires ALUMINUM: brackets, heat sinks GOLD: Integrated circuits

14 MINING CHART 14 MARCH 1, % plastics made of petroleum 16% ceramics made of silica 24% copper 2% silver, gold, palladium, platinum

15 MINING CHART 15 MARCH 1, 2012 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 MINING CHART 16 MARCH 1, 2012

17 MINING CHART 17 MARCH 1, 2012 OVER THE PAST 20 YEARS THE PHILIPPINES HAS BEEN THE POOREST PERFORMER PERFORMANCE IN ASEAN 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 ESTIMATED PROPORTION OF POPULATION LIVING BELOW $1.25/DAY (IN PPP) Philippines

18 MINING CHART 18 MARCH 1, 2012 MINERAL OREGLOBAL RANK ESTIMATED RESERVES (TONS) GOLD3 RD 5 BILLION COPPER4 TH 8 BILLION NICKEL5 TH 0.8 BILLION CHROMITE6 TH 40 MILLION THE PHILIPPINES RANKS HIGH IN THE WORLD ON MINERAL RESOURCES RESERVES MINING CAN PROVIDE THE BOOST THE ECONOMY NEEDS TOTAL REVENUES $43-B, 3% OF GDP BY 2018 INVESTMENTS FROM PROJECTED TO REACH $15-B WILL HAVE 3% SHARE TO GDP BY 2018

19 MINING CHART 19 MARCH 1, 2012 SHARE OF MINERAL EXPORTS TO TOTAL ANNUAL EXPORTS (%) Philippines Peru Brazil S. Africa Vietnam India

20 MINING CHART 20 MARCH 1, 2012 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 CHART 21 MARCH 1, 2012 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 MINING CHART 22 MARCH 1, 2012 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 THEN WHAT HAPPENS? ELECTRICITY AND WATER COME TO THE VILLAGE WE BREAK THE POVERTY TRAP GDP GROWS AT 7-8% P.A., NOT 5.5%

23 MINING CHART 23 MARCH 1, 2012 INFORMAL, SMALL- SCALE MINING TAKES OVER DISASTERS CONTINUE AND MINING COMMUNITIES REMAIN POVERTY-STRICKEN 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? JOBS AREN’T CREATED, SUPPORT SERVICES DON’T HAPPEN ECONOMY SUFFERS, GDP TRICKLES ALONG AT 3.5-4%

24 MINING CHART 24 MARCH 1, 2012 WHY IS RESPONSIBLE MINING BENEFICIAL? 1.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 MINING CHART 25 MARCH 1, 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 MINING CHART 26 MARCH 1, 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 MINING CHART 27 MARCH 1, 2012 THE PHILIPPINES HAS THE LOWEST LEVEL OF PERSONAL WEALTH MINING IS NOT THE ONLY REASON, BUT IT’S CERTAINLY A MAJOR REASON. COUNTRY2010 GDP per CAPITA (US$) INDONESIA4,200 VIETNAM3,100 PHILIPPINES2,200 Philippines MINING CONTRIBUTION TO GDP (%) Vietnam Indonesia

28 MINING CHART 28 MARCH 1, 2012 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. 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.

29 MINING CHART 29 MARCH 1, 2012 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 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.

30 MINING CHART 30 MARCH 1, 2012 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 EMPLOYMENT IN MINING AND QUARRYING (IN THOUSANDS)

31 MINING CHART 31 MARCH 1, 2012 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 MINING CHART 32 MARCH 1, 2012 Major Rice Producers 10 Largest Rice Producers in the Philippines (in tons): 1.Nueva Ecija - 1, 356, Isabela - 1, 036, Pangasinan - 1, 011, Iloilo - 823, Cagayan - 702, Leyte - 582, Camarines Sur - 560, Tarlac - 557, North Cotabato - 449, Maguindanao - 433, 766 No Operating Mines are located in these Provinces! Operating Mines

33 MINING CHART 33 MARCH 1, 2012  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 MINING CHART 34 MARCH 1, 2012 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 FOR EXAMPLE: THE MUNICIPALITY OF SIOCON HAS GONE FROM CLASS 4 TO CLASS 1

35 MINING CHART 35 MARCH 1, 2012 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 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

36 MINING CHART 36 MARCH 1, 2012 PH VS. INDONESIA (MINING TAXES) PHILIPPINES INDONESIA (1) Type of MetalAllCopperGold Nickel (2) 1) Income Tax30%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 Royalty5.0%N/A In Ancestral Land Add: Royalty to IPs1.0%N/A 2) Total9.5%4.0%3.75%5.0% Notes: 1. Assumes publicly listed company; royalty rates following approval of Regulation No. 9, 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 MINING CHART 37 MARCH 1, 2012 THE TAMPAKAN PROJECT 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  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!

38 MINING CHART 38 MARCH 1, 2012 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 THE TAMPAKAN PROJECT Source: David Pearce Centre for International Economics

39 MINING CHART 39 MARCH 1, 2012 IN THE FRASER INSTITUTE ANNUAL SURVEY OF MINING COMPANIES, PHILIPPINES IS IN THE BOTTOM 10 HOWEVER THE COUNTRY WOULD PLACE 7 TH – FROM THE TOP – ASSUMING A “BEST PRACTICES” POLICY REGIME 2008/ / / /2012 OVERALL RANK AS DESTINATION OF MINING INVESTMENTS NO. OF COUNTRIES SURVEYED RANK BASED ON PURE MINERAL POTENTIAL(ASSUMES A “BEST PRACTICES” POLICY REGIME) THUS, INVESTMENTS WOULD COME IN IF THE GOV’T ADOPTED MARKET-ENABLING POLICIES

40 MINING CHART 40 MARCH 1, 2012 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. 1.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 MINING CHART 41 MARCH 1, 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 MINING CHART 42 MARCH 1, 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 CHART 43 MARCH 1, 2012 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. SO WE HAVE TO CONTROL, NOT BAN. LET US WORK TOGETHER ON CONTROL. THANK YOU.


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