The Philippines is sitting on a gold mine – literally. The country’s gold reserves – the ones still in the earth – are the second biggest in the world. They alone, if they were extracted, could do for the Philippine economy what oil did for Saudi Arabia following the discovery of ‘black gold’ in 1938 near a village called Dammam. They could wipe out poverty and create a boom bigger than Japan’s ‘economic miracle’ – the post-war phenomenon that took that country from destitution to become the world’s second-largest economy.
Back in 2011, then secretary-general of the Philippines National Statistical Coordination Board, Romulo A. Virola, claimed that the country’s gold reserves were equal to 65.1 times the income gap – the amount needed to eradicate poverty. That’s a stunning statistic. But, of course, it fell on deaf ears.
The Philippine’s love-hate – and latterly mostly hate – relationship with this most precious metal is likely to ensure that it will never be used for that. Its gold is likely to remain in the ground; its wealth and what it could do for the country and its people never to be realised. Today, instead of being Asia’s top gold producer, the Philippines is the fifth after China, Indonesia, Uzbekistan and Kazakhstan. And it’s likely to sink further.
Rich gold deposits lie right across the archipelago from the island regions of Luzon to Minadao. They occur in 73 of the country’s 81 provinces. The estimated worth of these reserves have been placed at US$1.4 trillion – at today’s exchange rate that’s PHP70.2 trillion.
And yet governments have repeatedly failed to utilise this resource – seemingly, environment-management and land-rights issues are beyond their capability of addressing, leading them to suppress the industry rather than celebrate it.
The Volatilian™ believes this is one of he worst pieces of economic judgement the Philippines has ever made. We can’t think of a single country that would reject a gift like the gift of gold that the Philippines has been given – particularly a country that has so much need of it. This government and previous ones know the numbers; they know the economic might that the country’s gold resources can deliver. But politics-as-usual has ensured that maintaining poverty levels is preferable to getting this stuff out of the soil.
There are 26 million poor people in the Philippines; more than 12 million living in extreme poverty. They might not find a meal today. Meanwhile, Environment and Natural Resources Secretary, Gina Lopez, continues to make the case that closing down the country’s mines – and gold producers are on that list – is going to benefit these people more. They may not have food, they may not have jobs but they will – according to her – have a pristine environment for their children and their children’s children.
And we’ll believe that when we see it. We’ve seen, for example, the state of the country’s rivers and waterways; they’re a disgrace and they also fall under her purview. These dead bodies of stagnant polluted water are everywhere, not just around mining sites. But Lopez doesn’t take those on with much passion. If they were owned by big companies she might; but they’re not – filled with discarded refuse and human waste, they’re government waterways. There’s no glory in it for her.
Back to mining, Lopez has done little if anything to deal with illegal miners who have never given a tinker’s cuss for environmental standards any more than the care for the safety of their workers. But of course, again these aren’t large corporations that could – if she did her job properly – be fully regulated and kick in billions to the economy; far more than they do right now. These are local prospectors and often operating in indigenous areas. She can’t go after them, she might be charged with destroying their livelihood. So they get a free pass – environmentally destructive and unsafe though many of them are.
The real problem is this. The Philippine Government seems incapable of managing its mining industry. It’s not a new problem; it’s always been like that. And Lopez, from what we’ve seen, is the last person to handle this problem. It needs someone who’s environmentally aware, of course; but it certainly doesn’t need an eco-warrior in charge pursuing a personal vendetta against the mining companies.
It also needs someone who can work with the industry and not against it; someone who comprehensively understands mining.
Let’s take a look at just one company operating in the Philippine gold fields – OceanaGold Corporation, an Australian-Canadian transnational that has gold-mining interests in El Salvador, New Zealand and the United States.
This company is presently the subject of a Lopez suspension order which plunged the company’s shares by 8% and wiped US$200 million of its market cap within minutes of her announcement of the ban at a loose press conference she’d called even before notifying the company. That will do as a passing example of how irresponsible she’s been on this issue.
But if OceanaGold is truly an environmental danger, how come it operates and with the government’s blessing in New Zealand, a country where environmentalism is nothing short of being a religion? How come, too, it has approval to mine in South Carolina in the US to where it will likely now switch most of its Philippine resources? These countries have far more stringent environmentalist policies that the Philippines has ever had. The US practically invented them. Furthermore these countries rigidly enforce them.
OceanaGold – Australia’s fourth largest gold producer by market value – is now set to expand its South Carolina operation. As its chief executive, Mick Wilkes, explained: “My investors would now prefer that they had less exposure to the Philippines than more exposure”. Not surprising.
And so while mine workers at OceanaGold’s Didipio mine in Nueva Vizcaya province in the Cagayan Valley region of Luzon prepare to lose their jobs, there’s new job prospects for South Carolinians. Some 84% of employees come from the local community. Part of the company’s policy wherever it operates is to hire locally and use local businesses.
The company expects to output between 150,000 and 170,000 ounces of gold from its Haile, South Carolina mine this year. Once the mine extension workings have been finalised, it forecasts that by 2020 its annual output from Haile will have reached 250,000 ounces. Last year, the Didipio mine produced around 140,000 ounces.
It’s an odd juxtaposition, but while Lopez suspends OceanaGold’s Philippine gold mine, South Carolina’s former governor, Nikki Haley, now the US Ambassador to the United Nations, has supported its expanded gold workings at its mine in her state. Does anyone really believe that Hailey is any less environmentally responsible that Lopez? She’s certainly more economically responsible.
Lopez’s macho warrior image might appeal to some sectors of society in the Philippines, but we’re pretty sure they aren’t the ones that go hungry and whose kids go without basic necessities. They won’t live in shacks; they’ll have access to clean water too and they won’t have to defecate in a plastic bag because they have no lavatory. They can happily live without gold – though we’re prepared to bet many of them will have plenty of gold jewelry and trinkets lying around.
In New Zealand – one of Mother Earth’s fiercest protectors – OceanaGold has been working with the local government and local communities around Waihi in the North Island, a gold town that can trace its golden roots back to 1879. There, OceanaGold owns and operates the Martha Mine which produces around 100,000 ounces a year. It’s the community’s biggest employer. From the two NZ mines, the company harvests between 500,000 and 600,000 ounces annually and will do so through to 2030. Together these working account for 51% of OceanaGold’s production – against Haile, 28% (at present); Didipio, 21%.
Over the past two years, the company has spent US$570 million in acquiring new workings and is now on the look out for more. But not in the Philippines, most likely in Australasia or North America.
The rarely mentioned fact is the Philippines’ God-given gold bounty doesn’t belong to the government – it’s their job to manage it – it belongs to the Filipino people; all of them. And so if the Didipio mine is closed down – or any other legal gold mine for that matter, what’s actually happening is that this people’s resource is being squandered for little more than political grandstanding.
Lopez’s job if she did but know it is to protect the environment AND manage the country’s resources – it’s all in the job description; Secretary of Environment and Natural Resources. The two are not mutually exclusive. These two facets have to be coordinated; neither one should be upheld to the detriment of the other which is what’s happened under her watch. And with a vengeance.
The only people who are applauding her hippy-style of management are the Green elite who have no need for a gold industry. Indeed, many will be offended by the notion of mining gold in areas that Lopez wishes to designate as ecology zones comprising “blue lagoons and enchanted rivers” – another pipe dream that’s never going to be realised. But in the good old Philippine tradition, keep the people living in hope.