Mining crackdown to hit export supply chain

Published February 18, 2017, 10:00 PM By Bernie Cahiles-Magkilat

http://business.mb.com.ph/2017/02/18/mining-crackdown-to-hit-export-supply-chain/

The Philippine Exporters Confederation (Philexport) yesterday expressed “strong concern” over the Department of Environment and Natural Resources’ (DENR) directive to shut down 75 more mining firms, warning of serious economic repercussions as this affect the supply chain of raw materials for export products aside from massive job losses.

Sergio R. Ortiz-Luis Jr., Philexport president, said the group is highly alarmed by the new order of Environment Secretary Gina Lopez to cancel 75 more mining contracts. This comes on the heels of her earlier order on February 2 to close 23 others and suspend five mining firms that DENR deemed destructive to the environment.

Ortiz-Luis, Jr. stressed that Philexport supports sustainable and responsible mining, but warned that such a sweeping crackdown on the mining industry, which he said is a move that disregards due process, will have “serious local and global trade repercussions.”

One imminent danger is the loss of an estimated 2 million jobs as DENR’s closure and suspension order is seen to affect thousands of workers nationwide that rely on mining and related industries for their livelihood.

He added that mining companies continued to provide the salaries and benefits of their workers even when operations are closed due to rains or calamities.

“Where will these people go for jobs and livelihood, not to mention the effects on their dependents and the other stakeholders in the communities hosting them?” he said. “Even if the environment department has temporary funds to help the displaced workers, I doubt if these funds can be immediately disbursed.”

In addition, he said Philippine overall exports have been weakening for nearly two years now due to the slump in global demand, and the closure of these mining operations could further worsen the country’s export performance.

At the same time, the crackdown will severely undermine investor confidence and negatively affect the supply chain.

“Secretary Lopez’s action is posing danger not just to the mining sector, but also to other sectors in the supply chain including drilling, construction, hauling, and shipping, processing companies, manpower and transportation service providers,” said Ortiz-Luis.

He called for transparency and due process, emphasizing that if there are findings, then cases should be filed or the arbitration clause of the mining agreements invoked.

“But none of these took place and instead, these firms are now going through ‘trial by publicity’ that taints the good name they have established for years.”

Philexport pointed out that in the case of the Chamber of Mines of the Philippines (COMP), a Philexport member in good standing for years, majority of its members are ISO 14001 certified and several more are undergoing the accreditation process.

“They have also been faithful in their duties towards social development and management, environmental enhancement and protection and payment of taxes,” Ortiz-Luis, Jr. said.

He continued that local government units also stand to lose potential revenue stemming, including diminished local taxes, fees, and charges, as well as reduced shares from the national tax.

Instead of targeting legitimate businesses, Ortiz-Luis, Jr. said the DENR should focus on “eliminating illegal mining operations that do not pay taxes, nor help in community development and are destructive to the environment.”