Attracting large scale mining enterprises

Part 1

Last April 24, I witnessed an event in Puerto Princesa, Palawan that could be a major game changer in the continuing pursuit of Philippine society for a reasonable balance between benefiting the present generation of Filipinos, especially the poorest of the poor in the rural areas, and protecting the physical environment for future generations.  The provincial officials of Palawan should be complimented for their daring, leadership and prudence in holding a three-day Stakeholders’ Congress on Mining and Environment.  Despite ominous warning of “opening a pandora’s box and stirring a hornet’s nest” the Palawan government officials led by Governor Dennis Socrates decided that it was for the common good of the people of Palawan to put together the most disparate views from various sectors about the desirability of mining, especially large-scale mining, in what is popularly known as the Philippines’ Last Ecological Frontier.

  Among the close to 200 people who participated in the Congress were  officers of NGOs who stand for an absolute “No Mining in Palawan” position, ideologues who believe that “Sustainable Mining” is an oxymoron, local government officials who represent some of the most beautiful tourism sites in the province like El Nido, Coron and San Vicente and others from the south of Palawan whose municipalities benefit significantly from the employment generated by large-scale mining as well the taxes paid by the mining enterprises.  There were top officials from the regulatory bodies of government such as the Department of the Environment and Natural Resources (DENR) and Mines and Geosciences Bureau (MGB). The Church was well represented by Bishops who explained the principles of the stewardship of creation and environmental sustainability contained in papal documents such as  Pope Francis’ encyclical on the physical environment entitled “Laudato Si.”   There were representatives from the academe in such as fields as economics, mining engineering, geology , law, philosophy and theology.  Leaders of communities of indigenous tribes, that abound in the province and whose ancestral lands are often threatened by the presence  of mining, were also in attendance.

As an economist, I felt very much at home in such an environment of opposing views and contrasting vested interests.  I told the audience that the very core of economics is the study of how scarce resources can be efficiently and effectively allocated among the multiple goals of a family, a community, an enterprise, a province or an entire nation, while taking into account  that these goals more often than not are in conflict with one another.  I told them also that as a management professor, I  am involved in guiding CEOs and other top executives in the very important responsibility of a leader to a achieve a just balance among the various interests of the so-called stakeholders of an organization.  In the case of the business enterprise, these stakeholders are the rank-and-file workers, the managers, the funds providers (stockholders and creditors),  suppliers, immediate community in which the enterprise is located physically and the nation at large.  In the case of a province like Palawan, a very important stakeholder is the entire Philippine nation represented today by the BBM Administration  that had made very clear its top priorities as food security and promoting investments, especially foreign direct investments, in the light of the untenable debt-to-GDP ratio that resulted from the pandemic and the paucity of local long-term capital because of the very low savings rate of the Philippines.  And to top it all, there is the primordial national goal of reducing the very high poverty incidence which at 22 % is the highest in the entire East Asian region, in which the average poverty incidence is at single-digit levels of 0 to 9%.

The topic assigned to me coincided with a major research project that economists at the Center for Research and Communication (CRC) has initiated in partnership with the various stakeholders of the mining industry.  I reminded the audience that the mining sector is a major component of what is termed “industry” in the national economy, together with manufacturing, construction, and public utilities.  When we refer to a country going through the process of an industrial revolution (as happened in England during the last years of the 18th century to the early decades of the nineteenth century, 1790 to 1830) we refer to that stage in its economic development  in which the share of GDP shifts from agriculture and fisheries to industry.  For example, today agriculture, forestry and fisheries account for some 10 % of GDP, industry for about 30 % and services for the remaining 60 %.

The mineral mining industry is a primary sector which provides the raw materials needed by numerous industries in equally numerous countries, such as metallic ores and minerals that are processed as critical components for various broad industrial use.  It is difficult to imagine economies, both highly developed and developing, to run without such raw and processed mineral ores.  The so-called Industrial Revolution 4.0 (e.g. Artificial Intelligence, Robotics, the Internet of Things, Data Analytics, etc.) that is deeply entrenched in the highly developed countries will be made impossible without the nickel, copper, and other mineral ores that are indispensable  in the production of the hardware necessary for IR 4.0  such as computers, lap tops, tablets, smart phones, drones, robots, etc.  In fact, since the Philippines has hardly completed IR 1.0.  (mechanical revolution), IR 2.0 (the electrical revolution and the electronic revolution (3.0), it is even more dependent on other products of mining such as iron ore, aggregates and coal.

Speaking of coal, all countries, developed and developing, are exerting a great deal of effort to transition to renewable energy such as solar and wind in order to precisely attain sustainable development and addressing climate change.  In this very important transformation in the energy sector away from fossil fuels,  solar power plants, wind turbines and electric vehicles have to be manufactured.  All these products require  nickel and copper.  In this sense, sustainable development is impossible without mining.  Those who mouth the slogan that “sustainable mining is an oxymoron” have a very narrow concept of sustainable development.  In fact in the Stakeholder Congress  I attended in Palawan, I found it amusing that some of the most vocal critics of mining were very visibly making use of lap tops, tablets,  cell phones and other digital devices manufactured from the products of mining.   They also are the most vocal in championing renewable sources of energy such as solar, wind and geothermal which would be rendered impossible without the products of mining.

It was a coincidence that at the very same time the Palawan Congress was being held, our national leaders were considering joining the US-Japan Critical Minerals Agreement.  As reported in this paper on April 24,2024,  BW columnist and president of Stratbase, ADR Institute Victor C. Manhit agreed that it was  advisable for the Philippines to enter into such a trilateral agreement:  “The abundance of critical minerals like nickel and copper is an opportunity to position the country as a major player in the emerging supply chain for digital technologies, electric vehicles, and innovations in clean energy…The challenge is for the Government and mining industry to develop our capacity to produce and serve what experts see as sustained demand for these metallic minerals as the world shifts to green transportation and clean energy generation.”  The 2024 Palawan Stakeholders’ Congress on Mining and the Environment could not have been held at a more opportune time.  Again, congratulations to Governor Dennis Socrates and his fellow officials.  You have set an example that should be emulated by many other Philippine provinces rich in mineral resources.  To be continued.