TUBA, Benguet – President Rodrigo Duterte is “for open-pit mining,” acknowledging the fact that Philippine laws allow the extractive industry to operate in the country, a welcome development for Philex Mining Corp., as this could be a green light for its Silangan project, in Mindanao.
“We are happy because Silangan will finally see the light of day,” said the company’s CEO and president, Eulalio Austin, Jr., who was among the mining executives who met with the President for a dialogue in Malacañan Palace, on Thursday, Aug. 3.
The following day, Austin traveled to Padcal mine, in Benguet, Philex Mining’s sole operating mine, and met with the top 30 managers, telling them about Duterte’s stance on mining. “He says mining is within the law in the Philippines,” he said. “He also says that he is for open-pit mining, but that we must show him that we are protecting the environment.’ ”
“Challenge happily accepted, Mr. President,” said Joan de Venecia, VP-Legal of Philex Mining, on her social-media post.
De Venecia, who also attended the Aug. 3 meeting at The Palace, quoted Duterte as saying: “ ‘If there is a law allowing mining, who am I to stop it?’ ” She further quoted the President: ‘ “OKlang ako sa (I’m OK with) open-pit mining, but you have to spend and go to the people and make amends. You must support to give them another livelihood and my demand is plant trees. ”
Philex Mining has always been in the forefront of environmental protection, winning awards for its forestation and reforestation projects, spending at least P65 million for over 8 million trees planted in more than 2,700 hectares of land in its host towns of Tuba and Itogon, in Benguet.
In November 2016, Silangan was granted the Platinum recognition (for Exploration) under the Presidential Mineral Industry Environmental Award (PMIEA). It also won First Runner-Up—Exploration Category—for Best Mining Forest Award, as well as Runner-Up (Exploration-A Category) for Safest Mines Award.
These awards were given at the 63rd Annual National Mine Safety and Environment Conference (ANMSEC), which was held concurrently with the annual conference organized by the Philippine Mine Safety and Environment Association (PMSEA), at the CAP-John Hay Trade and Cultural Center, in Baguio City, last Nov. 18.
Austin told the Padcal managers that Silangan, a copper-and-gold project in Surigao del Norte that consists of two deposits (Boyongan and Bayugo), needs fresh investments of $800 million or P40.83 billion (although in an earlier statement this was placed at $765 million or P38.4 billion) to start operations.
It may be recalled that Duterte has declared his war against poverty, hunger, and underdevelopment on the southern Philippine island of Mindanao, where Surigao del Norte is a part of, thus Silangan could help a lot in the development of the province.
Silangan, for instance, is expected to generate P170 billion in revenues, P31 billion in national and local taxes, and at least 8,000 employment opportunities during its first decade of operation from 2020. It is also seen to spend P6 billion over the same 10-year period for social development, infrastructure programs, and environmental protection that will benefit not only Surigao del Norte but the whole of Mindanao.
Philex Mining Chairman Manuel V. Pangilinan has told reporters of a two-stage mining development in Silangan, the first being an open pit and, the second, an underground. He has also said the size of the open pit may be less than 2 kilometers, or smaller than the other similar operations.
[A]fter 10 years, more or less, we have to go underground, so it’s not a long-term open-pit operations as such,” he was quoted as saying in media reports after the company’s annual stockholders’ meeting on June 26.
In an Apr. 6 statement, Austin said Philex Mining plans to obtain the needed funds through loans and by looking for more investments from among the shareholders and funds from new investors. “We are proceeding with the Silangan project,” he said, but not before getting the “blessing” of the government through the Department of Environment and Natural Resources (DENR).
He also said the Silangan project’s MPSA, or Mineral Production Sharing Agreement, was above board and could stand any legal challenge. This was in reaction to Silangan’s inclusion in the 75 mining contracts of large-scale miners that the DENR, under the then-Secretary-designate Regina Lopez, announced as cancelled, allegedly due to their being destructive to watersheds.
Austin has said none of the areas covered by the Silangan MPSA are in proclaimed watershed forest reserves, where mining is prohibited. He stressed Philex Mining secured its MPSA—where the government shares in the production of the contractor (miner), whether in kind or in monetary value—on Silangan with the national government after a thorough review process conducted by all relevant government agencies, and upon the endorsements of the host communities and the local government units.
He has also said that none of the four tenements of another Philex Mining subsidiary, Philex Gold Philippines, Inc. (PGPI), is located in proclaimed watershed forest reserves, contrary to what Lopez, whose nomination was rejected by the powerful Senate Commission on Appointments, had claimed.
Silangan’s open-pit operation, Austin said, would be good for 10 years, then the project—owned by the Silangan Mindanao Mining Co., Inc. (SMMCI), a wholly-owned subsidiary of Philex Mining—would go underground and is expected to last for 20 to 30 years. “Silangan would be twice as big as Padcal,” he added.
Padcal mine, which has been operating conscientiously as a responsible miner for over six decades, milled 9.4 million tons of ore in 2016, producing 35 million pounds of copper that was 3 percent more than the previous year’s 34.1 million pounds, as copper grades improved to 0.206 percent. Also last year, gold production reached 103,304 ounces, owing to lower grades of 0.417 grams per ton and poor metal recovery, as higher-grade content in the current draw-points got depleted.
Average realized price for copper was 3 percent higher at $2.35 per pound in 2016 from $2.29 per pound in 2015, while average gold price increased 9 percent to $1,254 per ounce from $1,147 per ounce for the same period.
It was also in 2016 that Philex Mining repaid a total of $8.5 million in debt, bringing its total short-term debt to $62 million as of end-2016 from $70.5 million as of end-2015.
The company’s income surged 83 percent to P1.657 billion in 2016 from P905 million a year earlier, while consolidated costs and expenses fell 2 percent to P6.9 billion from P7.011 billion for the same period, owing to a continuously improving operational efficiency through innovation, cost rationalization, and manpower development.
Its revenues, meanwhile, rose 12 percent to P10.272 billion in 2016 from P9.189 billion in 2015, with copper accounting for P3.976 billion and, gold, P6.209 billion—both higher than the previous year’s levels by 15 percent and 10 percent, respectively. Also, revenues from silver grew 24 percent to P86.5 million.