Government News Analysis

Cimatu’s dual approach

Roy Cimatu, DENR Secretary

With retired Army general, Roy Cimatu (photo), now at the helm of the Department of Environment and Natural Resources (DENR), Philippine mining could start to make a realistic contribution to the economy. But if it does, it’s going to have to do so with green credentials. Open-pit mining is to be phased out – that’s a given. At the same time, mining companies will be afforded “enough elbow room” to develop their operations.

This, basically, is the brief that Cimatu’s been handed by his boss. Philippine President Rodrigo Duterte has told him to create and maintain “a delicate balance between economic development and environmental sustainability”.

Cimatu, who passed muster with the Commission on Appointments (CA) on Wednesday, believes those orders can be successfully carried out. He now officially takes the reins of the DENR from Gina Lopez whose scorched-earth policy for the mining sector – a 10-month roller-coaster ride of mine closures and mining suspensions – alienated the mining industry and caused a rift in the Duterte Cabinet.

After its traumatic relationship with Lopez in which half the country’s mines were put on notice, the Chamber of Mines of the Philippines (CMP) – an association of the country’s main mining interests – is breathing a sigh of relief. CMP executive director, Ronald Recidoro, told Reuters: “We are optimistic that we have a secretary who will base his decisions on evidence and facts and will take a more reasoned, more rational approach toward regulating the large-scale metallic mining industry”.

Lopez’s had attempted to close down 23 of the country’s 41 pits – mostly nickel – and suspend operations at five others, including the country’s largest gold mine.

On the news that Cimatu’s appointment had been successfully approved, shares in Nickel Asia Corp – the country’s largest nickel-ore exporter – leapt by 3%. So, as far as the industry’s concerned, having the general in charge of things is a positive move. It doesn’t hurt also that he’s a close confidant of the president, having been a key player in Duterte’s 2016 presidential election campaign.

As Chief of Staff of the Armed Forces of the Philippines – he was the country’s top soldier under former president, Gloria Macapagal Arroyo – Cimatu is used to taking orders. But he’s also used to giving them, and one thing we can expect under his leadership at the DENR is that the mining industry will learn some discipline.

Rules, particularly those involving the environment and the welfare of indigenous people, will be enforced, while illegal mining – a damaging covert sub-segment which Lopez didn’t get around to dealing with – will be confronted. If he’s going to clean up the environment in a mining sense, removing these destructive unlicensed operations, which also risk workers’ lives, will need to be part of his battle plan.

And that will have its challenges. Many of these operations are in the hands of powerful local interests – local clans and officials of local government units. Exploitive of their workers, they’ve managed to haul riches from the soil while desecrating the land with utter disregard. Crackdowns in the past have only bought a temporary respite for the environment.

Certainly, too, Philippine mining needs to start earning its keep. Its contribution to gross domestic product (GDP) is under 1% – actually, between 2012 and 2016 it managed to average a paltry 0.65%. Exports of metals and non-metals from Philippine mines haven’t made much of an impression either, accounting for around 5% of total shipments. As an employer, meanwhile, the sector’s workforce represents just 0.6% of total national employment.

These statistics are depressing – particularly given the rich metal and mineral resources on which the country sits. The Philippine Bureau of Mines and Geosciences – the DENR’s own agency – values the archipelago’s ore and minerals wealth at close to US1 trillion. To put it more plainly, it’s worth PHP51.11 trillion.

The figures speak for themselves and what they say is that the Philippines is resting on a mother load that could lift its people out of poverty and propel the country to a new level of economic security.

What Cimatu has pledged is that he’ll “pursue programmes and projects that would truly protect the environment and improve people’s lives”. Broadly speaking what that means is that the DENR has switched from being a thorn in the side of Philippine mining to being mining friendly – though environmental considerations will be the guiding factor for the industry’s development.

In short, he believes that it’s possible to serve both masters and provide the best for each – full protection of the country’s natural resources; more profitable use of its ore assets. Indeed, Lopez herself would seem to be supporting this approach. In a brief statement she released shortly after Cimatu’s confirmation to the post she said this: “I truly am convinced that if we nurture and protect the environment in a way that everyone benefits, we can rid the country of poverty”.

It’s now up to Cimatu to come up with a national mining policy that pulls all that together. The broad strokes of that are that the wider national interest will be at the heart of reforms and strategies which he puts in place.

One of those reforms is that open-pit mining – permitted under Philippine mining laws – will be made illegal. Largely responsible for the widespread damage to the country’s water resources, Duterte himself wants to see this practice ended. That said, a grace period – we don’t know how long – will be extended to the mining corporations to allow them to develop alternative methods for extracting minerals. In the meantime, Cimatu said, “open-pit mining will be undertaken in the context of global best practices and in accordance with accepted standards”.

The immediate thing to watch is what happens to the 27 mining companies which Lopez put on notice. The review of their cases is ongoing with all of them seeking a reversal of either closure or suspension orders. That review is expected to be completed before the end of the year but the CMP is quietly optimistic that its members will get a reprieve.

Hopefully, with the appointment of Cimatu, the pendulum for the Philippines’ mining industry has swung to a position in the centre. From the reckless and irresponsible mining of the past it swung through 180 degrees to the anti-mining regime of Lopez. Neither of these positions, however, was aimed at building a partnership between two precious resources – an abundance of minerals and the Philippines’ magnificent natural environment.

In fact it was worse than that; it was almost as if these two elements were in competition with each other, battling for supremacy. And the Filipino people – the actual owners of all that – were poorly served. All that was madness.

The government agency’s title is Environment and Natural Resources; the operative word is “and” – meaning that both need to be managed fully; not one at the expense of the other. These dual resources each have to be given a chance of making their contribution to an economy which – though moving ahead – still needs a lot of help. We wish Roy Cimatu a successful campaign.

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