Exclusive: Tampakan, other giant mines could strike gold in wake of Duterte's new order

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Metro Manila (CNN Philippines, April 26) — Three giant mines, all in President Rodrigo Duterte's turf Mindanao, along with almost a hundred more in the pipeline could soon strike gold.

That's after Duterte -- who in the early days of his term opted to keep a ban on open-pit mining -- decided to lift a nine-year old moratorium on new mining permits. This could pave the way for easing of local restrictions against open-pit mining.

Listed company Philex Mining Corporation's Silangan mine in Surigao del Norte and NADECOR's King-king mine in Pantukan town east of Davao City are included in the priority list of 101 applications up for approval, the head of the Mines and Geosciences Bureau told CNN Philippines.

The mothballed multibillion-dollar Tampakan mine, formerly led indirectly by Finance Secretary Carlos Dominguez III and directly by his brother Paul, could be resurrected and shortlisted for regulatory approval once it meets certain conditions, the mines bureau said.

All three mines hope to dig copper and gold in mineral-rich Mindanao. Two of them, King-king and Tampakan, will be through open-pit mining. The bureau said this is allowed under Philippine law, the 1995 Mining Act.

Critics of open-pit mining, including Duterte's first environment secretary, Gina Lopez, have pointed to its damaging impact on the environment.

"It's very clear in the previous executive order of former President Aquino the consistency of local laws with national laws. Malinaw na malinaw doon," Wilfredo Moncano, Mines and Geosciences Bureau Director, said in an April 23 interview.

"It is one of the safest mining methods that is being employed and it is based also on the geology of the deposit. So if the geology of the deposit would warrant that open-pit mining should be used, then technically open-pit gagamitin. Why use underground mining?"

Moncano also pointed out that open-pit mining is "an acceptable mining method all over the world." Mining is temporary land use so miners are tasked to have rehabilitation plans for the land after it has been mined, he added.

The Duterte government's U-turn stance on open-pit mining would be a turning point for Tampakan proponents whose undeveloped mine remains stalled by South Cotabato's environment code that has banned the said method since 2010.

A series of favorable outcomes

Duterte handed down Executive Order 130, or the presidential directive that lifted the moratorium, on his penultimate year as the highest leader of the land. It comes a year before his top economic manager Dominguez, a former mining executive and Davao businessman, returns to private life.

Dominguez's brother Paul was the president of Sagittarius Mines, Inc. (SMI), which holds the concession to the $5.9-billion copper-gold Tampakan project, until he resigned in 2007. He remains an affine of the Alcantaras, the Davao-based family behind listed conglomerate Alsons Consolidated Resources, Inc.

Alsons controls Sagittarius Mines through subsidiary Indophil Resources Philippines, Inc., which owns 100% of the common shares of SMI. The company holds full economic control of the miner after the Alcantara group bought out Anglo-Swiss commodity trading giant Glencore plc in 2015, according to SMI's website.

Dominguez was a director of Alsons until the listed holding company, through a disclosure to the Philippine Stock Exchange on June 20, 2016, announced his resignation from the board. The announcement came less than two weeks before Duterte's inauguration as president and prior to Dominguez' appointment as finance secretary.

But before Dominguez left Alsons, on June 8, 2016, subsidiary Sagittarius Mines had secured regulators' approval to extend its financial and technical assistance agreement or FTAA for the Tampakan project by another 12 years until March 2032. The extension was granted early, four years before the FTAA's supposed expiration in 2020. The Mines and Geosciences Bureau confirmed this extension during an April 23 interview with CNN Philippines.

In the weeks that followed after the FTAA extension in June 2016, Alsons' share price slowly had been climbing up from just P1.367 per share in April that year before it peaked at P2.065 each on June 21, 2016, a day after Dominguez's resignation disclosure was made, according to historical data from the stock exchange. The P2.065-per-share price is a five-year high for the stock, unmatched since then even as Alsons shares gained recently in the wake of the lifting of the moratorium on new mining permits. The shares were last traded last Friday at P1.29 apiece.

In his reply to a CNN Philippines query on what he thinks of remarks made by some quarters questioning the timing of the lifting of the moratorium on new mining permits and its possible link to his future plans or of his brother, Dominguez drove home the point that he has no more mining interest.

"I have no financial investments in the mining industry and no plans of having any in the future," the Finance minister told CNN Philippines over the weekend.

"My plans after my term as Secretary of Finance consist solely of full retirement as befits a person of my age. Moreover, the law requires that I not be engaged with any organizations I regulated. You will have to ask Paul what his plans are," Dominguez added.

After the extension of Sagittarius Mines' FTAA and before Duterte's new mining order, there was another event that primed the Tampakan grounds to make the gold mine soon within the Alcantara group's reach.

Tampakan's environmental compliance certificate or ECC, one of the conditions for a mining project to proceed to commercial operations, was restored by the Office of the President on May 6, 2019, two years after then Environment Secretary Lopez canceled it. Lopez, a staunch environmentalist who likened the Tampakan mine size to "700 football fields," did not secure the Commission on Appointments' blessing to formally become DENR chief, and passed away in 2019.

But while the Tampakan project won a beachhead in terms of FTAA and ECC, an August 2020 decision by the local municipality to terminate an old agreement for Sagittarius Mines to continue its mining operations in the area gave the miner a temporary setback.

Other conditions and the B'Laan Tribe

Still, the Tampakan municipality left the door open for a renegotiation with Sagittarius Mines for a new deal. A successful negotiation for a fresh license from the municipality is now one of the conditions set by environment regulators for the Tampakan project to be shortlisted for approval to join Silangan and King-king mines in the priority list.

"Gusto ng LGU (local government unit) ng renegotiation pero ang balita ko the LGU of Tampakan has already recommended to the province that they are now supporting the project," said Moncano.

[Translation: The LGU wants a renegotiation. I heard that the Tampakan LGU has already recommended to the province that they are now supporting the project.]

But there is one last hurdle for Sagittarius Mines: The "free, prior and informed consent" of the B'laan tribe whose Tampakan ancestral land, based on the miner's estimate, holds 15 million tons of copper and 17.6 million ounces of gold.

That consent will be contained in a certification issued by the National Commission on Indigenous Peoples (NCIP), which the mines bureau said it will also require from Sagittarius Mines.

But the opposition to the project in the past decades had turned violent, even bloody.

Tribal leader Daguil Capion lost his wife and two children in October 2012 in a military operation meant to arrest him. Capion back then was facing murder charges for the deaths of three people working for a road project funded by Sagittarius Mines, according to interviews he granted to environment news site Mongabay.com.

The wounds are still fresh for Capion and his tribesmen, said Philippine Misereor Partnership Inc. program officer for anti-mining campaign Melody Asia who has been helping the B'laan community hold dialogues with regulators to assert their rights for almost a decade now.

"Ongoing pa rin yung patayan, yung threat sa B'laan community," Asia said in an April 24 interview.

[Translation: The killings and threats in the B'laan community are continuing.]

"Pag natuloy ang mining sa Tampakan, yung watershed nila, yung farming nila, apektadong-apektado. Ngayon pa lang madugo, madami nang threats. Kawawa yung B'laan community. Kasi nahahati sila… Sinisilaw sila na aayusin ang roads, paaralin ang anak nila, yung mga ganong offers kaya yung iba pumapayag… Pero may iba rin na firm and nagdedecide na ilalaban namin yan kahit anong mangyari. Sacred land yan, hindi puedeng galawin," she said, recounting her conversations with the B'laan tribe.

[Translation: If the mining in Tampakan continues, the watershed and farming will be severely affected. Right now there are threats. It is already bloody. The B'laan community will suffer because they are divided. They are being promised that the roads will be fixed, their children will be sent to school, and other similar offers so some of them give their consent. But some of them are firm and have decided to continue the fight. Those lands are sacred. They shouldn't be touched.]

Other pending approvals

Tampakan's mammoth $5.9-billion investment eclipses any other single direct investment in Philippine mining, but unless it satisfies those conditions, it cannot belong to the Mines and Geosciences Bureau's shortlist.

Of the 101 shortlisted, 36 miners could start development and commercial operations in as early as three months' time, according to Moncano.

The 65 others are in the final stages of exploration and feasibility studies or at best, already have mining agreements with the government. The Silangan and King-king mines fall under this category, but are still pooling funding institutions or investors to raise capital.

"Lahat ng mga deliberations on feasibility studies, environmental protection enhancement program, final mine rehabilitation program, social development management program, lahat ng deliberation dyan nakafocus sa priority projects. I anticipate within the next three months if their MPSAs are approved, they can start the development and construction," the mines bureau head said.

Outside that priority list, there are almost 400 more permits waiting for conversion from exploration rights to mineral production sharing agreements.