‘Miners doomed to fail as DENR’s audit biased’

By BusinessMirror - February 27, 2017

http://www.businessmirror.com.ph/miners-doomed-to-fail-as-denrs-audit-biased/

TRADERS and scientists are clamoring for a re-audit of mineral resources and policy, as industry players and the government continue to lock horns on the future of the country’s mining sector after the release of the results of what was deemed as a “biased” audit.

The head of the National Institute of Geological Sciences (NIGS) on Monday called for a “proper audit” on the mining industry.

“A proper audit should be done, not only to determine the status of mining, but also to allow millions of Filipinos to continue working,” NIGS Director Marco Arcilla told reporters in a news conference.

Arcilla called the government’s audit as “bad”, as Environment Secretary Regina Paz L. Lopez “have included in her audit team people who are ideologically against mining.” “Basically, we don’t turn our backs to science and engineering,” he told reporters. “In the final analysis, who will clean and actually do the job are engineers and scientists.”

According to Arcilla, Lopez’s audit had been biased from the start because she included among them Alyansa Tigil Mina (alliance to stop mining) and former Mines and Geosciences Bureau (MGB) Director Leo L. Jazareno, whom Lopez appointed DENR consultant.

“The MGB could have done the audit as long as they are transparent from the start, but Jazareno worked under the previous administration of former President Benigno S. Aquino III before he was appointed by Lopez, which means he approved a lot of contracts that are now being questioned,” Arcilla told the Business Mirror.

On  February 2 the DENR announced the closure of 23 mining operations, saying many of them were operating in “functional watersheds”.

Off-limits

ON Monday the Silangan Mindanao Mining Co. Inc. (SMMCI) and Philex Gold Philippines Inc. (PGPI) filed separate letters in response to the show-cause orders (SCOs) the DENR issued on February 13.

The mining contracts of SMMCI and PGPI were among the 75 mineral production sharing agreements (MPSAs) threatened to be canceled as Lopez alleged their mining operations are situated within or near watersheds.

SMMCI and PGPI are both wholly owned subsidiaries of Philex Mining Corp., which operates the Padcal mine in Tuba and Itogon, Benguet.

Covered by the SCOs are the MPSA (149-99) of SMMCI for the Silangan Gold Project. The order for PGPI covers MPSAs for its following projects: Sibutad (063-97-IX), Vista Alegre (096-97-VI), Tambis (344-2010-XII) and Lascogon (148-99-XIII).

Prior to issuing the SCOs, Lopez earlier ordered the suspension or cancellation of 28 mining operations purportedly to protect watersheds from the adverse impact of mining to the environment.

More than a week later, the DENR chief came up with a decision canceling 75 mining contracts awarded to various mining companies—27 in Luzon, 11 in the Visayas and 37 in Mindanao.

In their letter responding to the SCOs, the SMMCI and PGMI said they were awarded the MPSAs after being subjected to the rigorous process prescribed by applicable law and regulations, which included obtaining the requisite regulatory clearances.

The two companies insisted that the areas covered by the MPSAs are open to mining, are valid and are legal.

“Mining is not prohibited in all watershed areas,” the company said. “Under Philippine law, only watersheds that are proclaimed, designated or set aside pursuant to law or presidential decrees, presidential proclamations or executive orders, as watershed forest reserves or as critical watersheds are closed to mining operations.”

Middle ground

WHILE thinking along the same line as Arcilla’s, some traders are offering a middle ground.

The Chamber of Commerce of the Philippine Islands (CCPI), the country’s oldest, is encouraging government to issue a regulation of the country’s mineral resources that is geared toward building up the local industrial supply chain, suggesting a review of the mining law.

CCPI President Jose Luis U. Yulo Jr. said the Chamber is espousing a “balanced view” of encourage more in-country manufacturing.

“We shouldn’t just get the ore and export it to other countries, and import the finished products,” Yulo told reporters. He explained that private companies “should commit to making these in the country and when they do so, they can have access to the mines”.

“In turn, when they build up the factories in these areas near the source, you need to take care of the area and this area will develop,” Yulo said. “But make sure you follow environmental rules.”

Enticing companies to build up the supply chain using mineral ores as raw materials—such as copper and nickel—will not just increase employment in the industrial sector but scale up human resource skills in the sector, according to Yulo.

Once the country builds enough capacity to be able to produce finished products, there can be a minimal allocation of the mineral ores to countries in need of the raw resources, he explained.

This proposal merits a review of the Philippine Mining Act of 1995, the Chamber president said.

“Anyone that is given a mining permit must consume the ore that he gets in manufacturing finished products,” Yulo said. “If there’s a surplus, then you can export.”

Political decision

ARCILLA said if the earnings are averaged for the entire country, “it would appear that the Philippines earns only 1 percent [from mining], but since mining is occurring in only 3 percent of the country, those 3 percent will lose a lot.”

He cited as example Palawan. Arcilla said in 2015 the province earned P23 billion from laterite mining while its tourism receipt was only P10 billion.

This meant “mines earn twice more than tourism,” he said.

Arcilla added the richest mining is in eastern Mindanao and the Caraga region for its rich chrome, copper and chromite deposit.

“The country will not lose much if these mines are closed but
pity the 1.2 million workers who would be affected, directly and indirectly,” Arcilla said.

He added that small-scale mining operations for gold in Davao represents 80 percent of the country’s total gold production, while 20 percent comes from all of the country’s biggest mines.

“These small miners are not taxed. If we allow the big mine operators to extract the gold, we will earn taxes from but would deprive 100,000 people of their jobs.”

“This is a political decision and President Duterte knew the big- time miners there,” Arcilla said. “He [Duterte] could solve the problem, provided that we solve the sharing scheme.”

Recto Mercene, Catherine N. Pillas and Jonathan L. Mayuga

Cusi wants to convert Malaya Thermal Power Plant into LNG plant

By Danessa Rivera (The Philippine Star) | Updated February 27, 2017 - 12:00am

http://www.philstar.com/business/2017/02/27/1676008/cusi-wants-convert-malaya-thermal-power-plant-lng-plant

MANILA, Philippines -  Energy Secretary Alfonso Cusi wants to convert the 650-megawatt (MW) Malaya Thermal Power Plant (TPP) in Rizal into a liquefied natural gas (LNG) facility as part of plans to ensure the country with reliable power supply in the future.

“Part of the condition is to convert it into LNG plant…so we won’t lose capacity of around 600 MW,” he said.

The plant’s conversion would allow the country to have a cleaner, more efficient and more reliable power plant, the Energy chief said.

 “From diesel, which is an inefficient and expensive power source… what we want is the country will still have 600 MW when we convert it into cleaner power and which we can use as a baseload power. As it is, the plant runs on diesel oil, which is only for peaking,” Cusi said.

However, converting the diesel power plant into an LNG plant should still be studied since the bidding process for the power facility has already started, he said.

Currently, the Malaya TPP is among the state-owned power plants scheduled to be privatized by

PSALM, the entity created by the Electric Power Industry Reform Act (EPIRA) to privatize government-owned power assets, has set the auction on March 8. The asset will be sold on an “as is, where is” basis.

So far, four power companies have expressed interest in the sale of the Malaya TPP namely APT Global Inc., Phinma Energy Corp., Riverbend Consolidated Mining Corp. and AC Energy Holdings Inc.

Cusi said it would be better if PSALM would re-bid the Malaya TPP to include the conversion to an LNG plant in the transaction documents.

“That has to be really looked at,” he said. “If we need to re-bid for that reason, then it would be better if we re-bid it.”

Meanwhile, the Energy chief is also looking at rehabilitating the 982-megawatt Agus-Pulangi hydroelectric power plants (HEPP) in Mindanao before selling the facilities, especially with an oversupply scenario looming in the region by 2018.

“Having more than enough time in Mindanao, it is an opportune time to rehabilitate the plants. After that, we can privatize it. We don’t like that if it would not be run given its current situation,” Cusi said.

Earlier, Finance Secretary Carlos Dominguez, who chairs PSALM, said rehabilitating the Agus-Pulangi HEPP is the top priority before undertaking any privatization process for the facility.

Currently, the Agus-Pulangi HEPP can only supply 40 percent of its total nameplate capacity to the Mindanao grid. However, it is considered as the cheapest power source in Mindanao, with capacity being sold at around P2.70 per kilowatt-hour.

PSALM is undertaking a study with International Finance Corp. (IFC) to determine the best way to privatize the Mindanao power asset.

China funding eyed for Agus-Pulangui rehab

Published February 26, 2017, 10:01 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/02/26/china-funding-eyed-for-agus-pulangui-rehab/

The Philippine government, with the endorsement of the National Economic and Development Authority (NEDA), is eyeing official development assistance (ODA) and other forms of funding from the Chinese government to bankroll the proposed rehabilitation as well as the expansion projects for the Agus-Pulangui hydropower complex in Mindanao.

The Agus-Pulangui retrofit and upgrade plan is among the projects lined up by the NEDA’s Investment Coordination Committee-Cabinet Level for the Philippines and Chinese government’s cooperation agreement.

Energy Secretary Alfonso G. Cusi told reporters that he concurs with the recommendation to pursue rehabilitation of the 727-megawatt Agus and 225MW Pulangui hydropower facilities prior to any moves of privatizing their operations or divesting them.

“Having more than enough power in Mindanao is an opportune time that we have, to do the rehabilitation, and then after that, we can pursue privatization,” he said.

Cusi noted that the timeline of privatization as well as rehabilitation shall be done based on a study that both the Power Sector Assets and Liabilities Management Corporation (PSALM) and National Power Corporation (NPC) will present. NPC, according to the energy chief, will continue to operate the Mindanao hydropower assets that may then act as “stabilizer” when there are technical upsets in the power system.

The rehabilitation of the Agus-Pulangui complex will have various components, including that of Agus 6 Unit 4; Pulangui 4 selective dredging phase 3; and Balo-i Plains Flood Control Project.

Proposed expansion projects shall cover construction of the targeted Agus 3 hydroelectric power development as well as the Pulangui 1, 2, 3, 5, and 6 ventures.

For the Pulangui 1, 2, 3, and 6 expansion projects, pre-feasibility studies were already completed by Germany’s Lahmeyer Group; while Pulangui 3 was initially met with resistance from residents as it was noted to involve “inundation or submergence of the whole municipality of San Fernando, Bukidnon” – with estimated 18 barangays getting affected.

Expansion undertaking on the proposed Agus 3 plant will set greenfield capacity addition of 224MW to the hydropower complex. Estimated investment for this was placed at $1.0 billion.

On the Agus 6 plant sited in Maria Cristina, Iligan City, the rehabilitation project involves the restoration of its capacity from 25MW deration to 50MW rated capacity. Funding for such scope of work had been pegged at R504 million.

The proposed dredging at the Pulangui 4 facility, according to studies, intends to “mitigate siltation problem of reservoir and to increase energy output.” Cost of this venture had been calculated at R500 million.

For the Balo-i flood control project, the goal is to increase output of the Agus 1 and 2 hydropower plants to a maximum of 60MW, as well as address perennial flooding along the area’s plains especially during rainy days.