Philippine Resources Issue1 2014, feb-april

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February 2014 - April 2014

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Headlines in this issue

8

22

Resources Commentary

8 “Ronnie” Penarroyo has another look at the Indigenous Peoples Rights Act of 1997

44

16 Patricia A. O. Bunye asks what ASEAN integration 2015 mean for miners 22 Philippines pins hopes on fiscal incentives to promote oil and gas industry

Economic Commentary

26 Philippines dubbed as “New Asian Tiger” in Investment Forum 28 Postcard of the Future - The necessity of effective urban planning in the Philippines 26 Water as liquid gold: European Chamber’s Water Forum Challenge 4 Philippine Resources

Mining

36

Philippine Mining Briefs with Jimbo Gulle

42

TVI looking at life after mining

45

PRHI acquires interest in Canadian miners

Energy News

44

Gas2Grid takes more big strides at Malolos

46

Otto looking for new SC 55 partner

February 2014 - April 2014

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Lets tell the world about the beauty of the Philippines

Philippine Resources Mining, Petroleum & Energy Journal

February - April 2014 Philippine Resources Journal is published independently for executives in Philippine mining, petroleum, energy and associated business sectors.

Publisher Elizabeth Galura Charismatic (WA) Pty Limited Consulting Publisher Greg Brimble Editor Colin Sandell-Hay Sales and Marketing Kevin Lewis kevin@philippine-resources.com & Cecilia Pamular cecille@philippine-resources.com Design/Production Elizabeth Galura Journalists Maria Paula Tolentino Jimbo Gulle Steve Hill Contributors Mars Buan Patricia A.O. Bunye Fernando Penarroyo ___ Manila publishing office Lomar Offices Paseo de Roxas Bldg, 3rd Floor 111 Paseo de Roxas Legaspi Village Makati, Metro Manila, Philippines Phone +632 815 8836 or +632 714 0029 ___ Individual contacts Greg Brimble greg@philippine-resources.com Australia: +614 172 20759 Manila: +63949 338 3664 Philippine Resources Journal is printed in Manila by NuPrint.

Digital online edition www.Philippine-Resources.com

6 Philippine Resources

I

have traveled to most parts of the world during my 40 plus year career in the media and in my personal life.

By Colin Sandell-Hay

Philippine Resources’ Consulting Publisher Greg Brimble is a travel nut and has spent most of life looking for the most beautiful places around the world.

If there is one thing we both agree on, the Philippines is one of the most spectacular countries we have visited.

However, if we both didn’t happen to marry our beautiful Filipino wives, Evelyn and Elizabeth, we most likely would never have taken the opportunity to really discover the beauty of its landscape and its people.

And we are far from being alone.

Almost all Australians that I have spoken to have no idea that the Philippines is so breathtaking Their expectations of the country is that it is poor, has security issues - and is often affected by natural tragedies.

None of them have an idea that the country is made up of more than 7,100 beautiful islands and some of the most stunning beaches in the world. And Australians love to travel in Asia and love tropical paradises.

est cities, particulary with many Western Australian companies already involved in the resources sector in the Philippines.

The good news is there is already some significant work being done by private individuals in social media and websites like Facebook - and some of the Philippines’ tourist-related organisations have also started to make inroads.

Philippine Resources is 100% behind supporting the Philippines in attracting more tourists and we will continue to do what we can to promote the country to our global contacts.

This is not meant to be a criticism of those that have been responsible for marketing the Philippines as a tourist destination to a massive, big spending Australian market, but more of a reminder that more needs to be done.

There is a tremendous opportunity to add significantly to the Philippines economy and to boost employment opportunities for the people of this great nation if its beauty is promoted.

The recent decision by Philippine Airlines to cut its Perth to Manila route was a major disappointment and really came down to a missed opportunity to open a market in one of Australia’s wealthi-

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Resources Commentary

February 2014 - April 2014

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The Indigenous Peoples Rights Act of 1997: Does it Give IPs the Right to Veto Development Projects?

By Fernando Penarroyo

T

he Book of Genesis narrates the first recorded acquisition of land

by Abraham who wanted to own freehold land in Hebron. Abraham was required not only to have the power of purchase but was also tasked to secure the public and formal consent of the community. He was in the same predicament as present day resource developers.

Local government units (“LGUs”) outright refusal on consents to resource development within their territorial jurisdiction ranging from declaration of mining moratoriums, ban of particular technologies like open pit mining and submarine tailings disposal, and opposition to energy projects like coal-fired and hydro power plants, wind farms and geothermal exploration, have often created controversies with the national government and the resources industry.

Perhaps the opposition to resource development projects, particularly mining, is the widespread concern that the sector is not paying its fair share and that mineral wealth has rarely translated into the alleviation of poverty.

For LGUs where resource development have been part of their revenue generation, they are more concerned with the assurance that communities hosting resources development would get their timely share of the proceeds.

Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law (fspenarroyo@punopenalaw.com). He specializes in Energy, Resources and Environmental Law, Business Development and Project Finance.

8 Philippine Resources

However, more than fair and prompt revenue sharing, public advocacy groups believe that the main issue is the autonContinued on page 10 >

Resources Commentary February 2014 - April 2014

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< Continued from page 8 omy of local communities to accept or veto development projects normally approved at the national government level.

Other issues raised by local governments include: wastes, emissions and pollution; loss of agricultural land and subsequent

livelihood; threats to water resources; relocation and right of way; and health and safety of workers and communities.

Local Government Share in National Wealth Section 7, Article X of the 1987 Constitution provides that LGUs shall be

entitled to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits.

Section 289 of Republic Act No. 7160 or the Local Government Code of 1991 states that LGUs shall have an equitable share in the proceeds derived from the utilization and development of national wealth within their respective areas.

Under RA 7942 or the Philippine Mining Act of 1995, LGUs would receive their share from the two percent excise tax from the gross revenue of a mining company operating in their locality.

According to the IMF Report “Philippines: Reform of the Fiscal Regimes for Mining and Petroleum” (IMF Country Report No. 12/219, 2012), one indication of the low contribution of the mining sector to government revenue is that payments to government as a share of total taxes is less than the sector’s share of GDP. Its low contribution to government revenue is, in part, due to: the mining sector comprising mostly small-scale mines (with about 34 percent of total value mining production), which do not pay a lot of tax; older mines that are in their twilight years; and a few new mines that are enjoying tax holidays.

The IMF has suggested a range of reforms of the fiscal regime for mining by proposing measures that would increase government revenue through an increase in excise taxes, repeal of the BOI and Mining Act tax incentives, and provide continuous appropriation for the distribution of the LGUs share.

In the energy sector, Section 5(i) of RA 7638 or the Department of Energy Act of 1992 mandates the Department of Energy (“DOE”) to “devise ways and means of giving direct benefits…and equitable and preferential benefit to the region that hosts the energy resource and/or Continued on page 12 >

10 Philippine Resources

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< Continued from page 10 the energy-generating facility.”

RA 9136 or the Electric Power Industry Reform Act (“EPIRA”) further affirms “the obligations of generation companies and energy resource developers to communities hosting energy generating facilities and/or energy resource developers…shall continue.”

Energy Regulations No. 1-94 or the Rules and regulations Implementing Section 5 (i) of Department of Energy Act of 1992 (“ER 1-94”) prescribed the provisions of direct benefits to LGUs hosting energy resource development projects and/or energy generating facilities within their territorial jurisdiction.

With respect to the LGUs’ share in renewable energy projects, RA 9513 or the Renewable Energy Act of 2008 has basically amended EPIRA and the provisions of ER 1-94, and its Attendant Rules and Procedures.

EO 79 - Source of Friction Between the National Government and LGUs Executive Order No. 79 (“EO 79”) issued

by President Aquino on 06 July 2012 directed LGUs that host mining operations to “conform to the regulations, decisions and policies…promulgated and taken by the National Government.”

It basically reminded LGUs that they are inferior to the national government and ordinances passed by local government officials believed to conflict with national law or policy may be “corrected” by the President.

EO 79 purports to address the industry concern on LGUs passing ordinances banning open-pit mining, as in the case of South Cotabato. The Catholic bishops, in a national forum on mining organized by the Social Action – Justice and Peace of the Catholic Bishops’ Conference of the Philippines, rejected EO 79, warning that it threatens local autonomy and may give rise to violence in mining areas.

12 Philippine Resources

Atty. Dante Gatmaytan (Bantay Kita Policy Paper No. 2012-3) argues that the President does not have the power of control over local government officials, only the power of supervision as the President’s authority is only limited to seeing to it that rules are followed and laws are faithfully executed.

statutory or legal infirmities in the proposals.

He cited Province of Negros Occidental v. Commissioners (G.R. No. 182574, 28 September 2010) where the Supreme Court held that “the President may only point out that rules have not been followed but the President cannot lay down the rules, neither does he have the discretion to modify or replace the rules.”

While the DOJ agreed with the administrative remedies proposed by the DILG, it added that an action for declaratory relief would be proper only if adequate relief was not available through other existing forms of actions or proceedings.

On the other hand Dean Antonio La Viña of the Ateneo School of Government believes that the 1987 Constitution and Philippine Mining Act, which under our hierarchy of laws are generally supreme to local ordinances, do not mention any prohibition on open-pit mining, which belief is also shared by Atty. Gatmaytan.

On 18 September 2012, the Department of Justice (“DOJ”) came out with Opinion No. 87, series of 2012 in response to the questions of the Department of Interior and Local Government (“DILG”) about local government ordinances that ban open-pit mining activities.

The DILG also sought from the DOJ the legalities of the following: judicial remedies through declaratory relief or through the declaration of nullity of the ordinances; administrative remedies through a Memorandum of Agreement between the DILG and the Office of the Ombudsman to address abuses of power of local officials invoking local autonomy; and the filing of administrative cases on grounds of grave abuse of authority or grave misconduct.

In the seven-page legal opinion the DOJ raised the general rule that ordinances are valid only if they are consistent with the Constitution and existing laws and that the national legislature is still the principal of the LGUs. The DOJ also affirmed that administrative charges proposed by the DILG against the local officials and found no constitutional,

Aside from imposing administrative sanctions, the DOJ agreed with the DILG that a filing of a petition before the court to seek nullification of the said ordinances is also an option.

On 08 November 2012, the DILG issued Memorandum Circular No. 2012181, which directed provincial, city, and municipal elective officials to confine themselves only to the imposition of reasonable limitations on mining activities conducted within their respective territorial jurisdictions that are consistent with national laws and regulations in accordance with Section 12 of EO 79.

The DILG Memorandum Circular explained that local governments are inferior to the national government and the power of legislation of LGUs is merely a delegated power coming from Congress.

Municipal governments are only agents of the national government and cannot act as superior to the principal or exercise powers higher than those of the national government.

The DILG, citing Lina v. Paño (G.R. No. 129093, 30 August 2001), stressed that the principle of local autonomy under the 1987 Constitution simply means “decentralization”; it does not make local governments sovereign within the state.”

Governors and mayors were then directed to “take appropriate measures for the amendment of the provisions of existing relevant ordinances and guidelines…”

Atty. Gatmaytan (Bantay Kita Policy Note 2012-004) argued that the DOJ Opinion in question failed to examine the legal issues involved and determine whether the ordinance in question conContinued on page 14 >

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<Continued from page 12 > tradicted the Constitution or the Mining Act of 1995 citing Social Justice Society v. Atienza (G.R. No. 156052, 13 February 2008), which held that when national laws are ambiguous and are pitted against “the unequivocal power of the LGU to enact police power and zoning ordinances for the general welfare of its constituents,” the Court will tend to favor the LGU. Atty. Gatmaytan justified the LGUs’ ordinance banning certain forms of mining as not inconsistent with law and an exercise of police-power measures that promote the constitutional right of a balanced and healthful ecology and such measures can be enacted by LGUs to protect the health and welfare of their constituents.

He further stated that under the Local Government Code, LGU approval is required for national government projects and it is the courts that should declare the invalidity of these ordinances.

Clipping LGU Powers over Smallscale Mining LGUs regulate the small-scale mining industry and quarrying by issuing permits and ordinances. However, EO 79 imposed limitations on the powers of LGUs over small-scale mining by requiring strict compliance with RA 7076 or the People’s Small Scale Mining Act and its Implementing Rules and Regulations, (DENR Administrative Order 34 Series of 1992) and Presidential Decree No. 1586 (Environmental Impact Statement System).

Small-scale mining can now only be allowed in areas identified by the national government called “Minahang Bayan” and upon procuring an Environmental Compliance Certificate from the DENR. Another issue is the proliferation of black sand mining purportedly covered by “dredging permits” issued by LGUs, which the national government claims do not fall under the ambit of EO 79 on small-scale mining.

14 Philippine Resources

Some LGUs have issued “local mining permits” for black sand mining even if EO 79 and RA 7076 prohibit them from doing so.

tify the imposition of regulatory fees or charges but the regulatory fees must be based on flat rates and not on the type of products or goods.

Dredging permits were also issued by LGUs as a disguise for a “mining permit,” so that the extraction of black sand from the seashore will not fall under the ambit of EO 79 or RA 7076 and at the same time dodging the payment of taxes.

Also, LGUs have no authority to impose taxes on the business of mining especially if the company is registered with the Board of Investments under the Omnibus Code of 1987 through Executive Order No. 226.

According to the MGB, the Mining Industry Coordinating Council, created under EO 79, has submitted a proposal to President Aquino to stop all black sand mining in the country pending the establishment of a regulatory mechanism.

The Local Government Code has enumerated with crystal clear precision the limitations on the taxing power of the local government units. Under Section 133 (g), “business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4) years” may not be taxed

by LGUs.

All applications for black sand mining permits have been denied until the implementing rules and regulations of RA 7076 have been revised to allow black sand mining beyond a 200-meter limit zone from the shoreline.

Local Government Taxation In addition to shared revenues from the national wealth, LGUs levy local business taxes, real estate taxes, and various fees and charges, which to some resource developers have become prone to the abusive exercise of regulatory authority by some LGU officials.

Under the Local Government Code, LGUs have the power to enact ordinances that will regulate the operation of businesses within their territorial jurisdictions by imposing fees and charges for revenue and regulatory purposes.

Some LGUs imposed excessively large amount of “regulatory fees” on resource companies under revenue ordinances, which exceeds the cost of the inspections and other government services being rendered as a result of the companies’ operations.

In essence, LGUs has “mislabelled” the exaction as mayor’s permit, when by its very character it is undeniably a tax.

LGUs must perform acts of regulation, inspection, and surveillance in connection with the business in order to jus-

What was originally conceived as a means by which LGUs can independently raise funds to sustain their activities has become an opportunity to exact more money from resource developers.

In the name of local autonomy, local government officials impose additional conditions on contracts issued by the national government. This is in addition to the use of political patronage where favored contractors and workers are imposed on companies to guarantee harmonious relationship with local leaders.

Local Economic and Poverty

Development

According to the Mining and Local Economic Development Report prepared by the Oil, Gas and Mining Unit of the World Bank, appropriate local economic development (“LED”) instruments will help address the perceived lack of automatic spillover effects of resources projects on host communities.

LED program involves voluntary participation of resources companies and local government among others to work together to ensure that the local population, including the poorest segments, can benefit from investments in resource Continued on page 16 >

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What does ASEAN integration 2015 mean for the mining industry?

Patricia A. O. Bunye

F

rom media coverage, most of us would have heard by now that “ASEAN Integration 2015” is upon us, but what does this actually mean for the mining industry?

We must begin with the understanding that the Association of Southeast Asian Nations (ASEAN) is a community of more than 600 million people living in ten countries. It was established on 08 August 1967 with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of ASEAN, namely Indonesia, Malaysia, the Philippines, Singapore and Thailand. These countries were later joined by Brunei Darussalam

(1984), Vietnam (1995), Lao PDR and Myanmar (1997) and Cambodia (1999).

ASEAN is one of the most dynamic regions of the world, with its share of world GDP and world trade sharply increasing over the past decades. In 2003, the ASEAN Member States adopted the ambitious goal of forming an ASEAN Economic Community (AEC) by 2015.

a single market and production base with free movement of goods, services, investment, skilled labor, and freer flow of capital among its 10 member nations.

By doing so, ASEAN expects to better compete as a group with its neighbors China and India in terms of trade and investments.

The AEC has the goal of regional economic integration by 2015. This envisages: (1) a single market and production base; (2) a highly competitive economic region; (3) a region of equitable economic development; and (4) a region fully integrated into the global economy.

The AEC areas of cooperation include human resources development and capacity building; recognition of professional qualifications; closer consultation on macroeconomic and financial policies; trade financing measures; enhanced infrastructure and communications connectivity; development of electronic transactions through e-ASEAN; integrating

The aim is to transform ASEAN into a

Continued on page 18 >

< Continued from page 14

Conclusion

development.

The government must embark on a realistic assessment to achieve inclusive and sustained economic growth in the resources industry. The legal issue of local autonomy in relation to the exploration, development and utilization of natural resources vis a vis the power of control by the executive over LGUs will only be settled by judicial interpretation and until then lingering uncertainties will prevent developers to put more money into the ground. In the meantime, the Philippine government is using the “carrot and stick” approach in order for LGUs to toe the line. By increasing the revenue from mining and fast tracking the distribution of LGU shares, the national government hopes to make mining an acceptable development option for LGUs.

The persistence of poverty in communities highly dependent on resource extraction for local economic wellbeing has made poverty reduction an increasingly important driver of LED not only as an objective but also as a strategy in itself.

An important component of an LED program is the development of micro, small and medium sized enterprises as suppliers to, or downstream producers or as entrepreneurs/businesses independent from the resource project that strengthen the overall competitiveness and economic development of the host community. In the National Government-Local Government Joint Energy Forum held on September 2013, the DILG reported that it has embarked on an initiative called the Philippines Poverty Environment Initiative (“PPEI”) to promote the poverty-environment linkage in national and local governance through rational utilization of natural resources, environmental protection, social equity measures, and poverty alleviation actions towards an inclusive green growth.

PPEI’s Development Agenda aims to improve the benefits of the extractive industries and limiting its environmental impacts thru the timely release of LGU’s share from revenues in the utilization of the national wealth and the utilization of these revenues for sustainable development programs and projects that address the environmental degradation.

16 Philippine Resources

At the same time, the national government hopes to crack the whip against recalcitrant LGU officials through the enforcement of available administrative remedies and sanctions.

LGUs must be encourage to integrate natural resources planning in their local development plans, programs, budget systems and governance regimen. It is important that there is transparency and accountability in the collection, distribution and utilization of revenues from the resources industry. Unless these are addressed, revenues from resource projects will be perceived as lining the pockets of corrupt politicians rather than benefiting the host community.

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<Continued from page 16 industries across the region to promote regional sourcing; and enhancing private sector involvement for the building of the AEC. Mining Cooperation In 2007, ASEANâ&#x20AC;&#x2122;s leaders adopted the ASEAN Economic Blueprint to serve as a master plan guiding the establishment of the AEC, one of the major items of which is â&#x20AC;&#x153;Mining Cooperationâ&#x20AC;?.

In this regard, the ASEAN Member Nations shall enhance trade and investment and strengthen cooperation and capacity in geological and mineral sector for sustainable mineral development in the ASEAN region. Specific strategies and actions to be undertaken are: Strategy 1: Facilitating and Enhancing Trade and Investment in Minerals - Establish information sharing mechanism with the view to possibly harmonize mineral policies of ASEAN Member States

- Review existing regulations and incentives with a view to promote and facilitate mineral trade and investment

Mineral Information System, including the appointment of focal point or official in charge

- Establishment of a one-stop mineral trade and investment promotion/ facilitation center in each ASEAN Member State

- Sharing of information on increasing added value in minerals and precious stones

- Continuation of ASEAN Public-Private Sector Dialogue on Minerals - Promote and facilitate joint venture cooperation between ASEAN private sector companies

- Development of ASEAN database on minerals - Organizing training courses, exchanging experts in mineral database sector between ASEAN Member States

- Hold consultative sessions with ASEAN Dialogue Partners

- Exchange geological-mineral samples between ASEAN Member States and with Dialogue Partners

- Operationalize, maintain and enhance the ASEAN Mineral Information System, including its infrastructure

Strategy 2: Promoting Environmentally and Socially Sustainable Mineral Development

- Exchange of information, statistics and publication on mineral exploration, development and utilization as well as value-added activities, including mineral laws and regulations

- Sharing information on existing incentives and laws/regulations, if any, to support smart partnerships between public and private sectors

-

Updating and enhancing the ASEAN

- Facilitate dialogues and forums to enhance investment and cooperation in environmentally and socially sustainable mineral development - Recognition of best practices in environmentally and socially sustainable mineral development in the form of awards - Establish information sharing mechanisms on the social frameworks, environmental standards and legislations - Develop sustainability assessment framework and guidelines as well as promote sustainability database development of the mineral sector - Conduct training to strengthen capacities of national authorities to improve management frameworks for safe, responsible and environmentally sustainable mineral development Continued on page 20 >

18 Philippine Resources

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<Continued from page 18 - Identify and document indigenous knowledge and best practices in environmental protection and rational utilization of mineral resources - Continuous programmes on exchange of knowledge on environmentally and socially responsible mineral development practices - R&D on increasing added value in minerals and precious stones - Identify, document and disseminate remediation and rehabilitation strategies and measures for abandoned and closed mines/sites - Training and research to build the human and technical capacity in remediation and rehabilitation measures for abandoned mines/sites and mine closures

on environmentally sustainable mineral development - Identify existing networks and encourage cooperation within ASEAN for mutual capacity building - Conduct cooperative programmes with Dialogue Partners for transfer of technology

- Training and exploration on offshore sea minerals exploration - Identification of areas for cooperative studies

- Develop education material on the benefits of environmentally sustainable mineral resources development

- Intensify research and development on new technologies in evaluation, mining, processing and utilization of mineral raw materials

Strategy 3: Strengthening Institutional and Human Capacities in the ASEAN Minerals Sector - Organization of training programmes based on the outcomes of the Analysis of Training Needs of ASEAN Mineral Administrations/ Agencies

- Conduct mutual visits and meetings of experts in research and development

- Training on geological surveys and resource mapping - Exchange of geological and resource information between ASEAN Member States through regional conferences - Short training courses on resource mapping, evaluation and mineral economics - Training of mineral researchers and geoscientists - Seek opportunities of scholarship on mineral-related post graduate programmes

20 Philippine Resources

- Capacity building on the exploration of shale gas in organic rich schist formation

- Exchange information on communication campaigns for public awareness on environment, health and socio-economic benefits of mineral resources development

- Organize dialogues for interaction and exchange knowledge on sustainable mineral development

Patricia A. O. Bunye is a senior partner at Cruz Marcelo & Tenefrancia and head of its mining and energy practice.

She is also President of DiwataWomen in Resource Development, Inc. Questions and comments are welcome at po.bunye@cruzmarcelo.com.

Industrial Minerals Conference (AIM), Base Metals and Precious Metals Conference

- Short term training courses on specialized areas, especially environmental management, minerals processing and rehabilitation - Exchange of scientific knowledge, experience through seminars, conferences and field technical visits such as Asian

- Identification of areas for technology transfer

- Sharing and exchange of information and experience on latest technology and practices through regional conferences - Holding trainings on Extractive Industries Transparency Initiative (EITI) for ASEAN Senior Officials on Minerals It is not the intention of this author to discuss whether or not the Philippines is ready to embrace ASEAN Integration.

However, it is clear that much work still has to be done to increase awareness of AEC and its implications.

As stated by former President Fidel V. Ramos at the 46th ASEAN Anniversary Lecture in Bangkok on 08 August 2013, “(T)here is no way an ASEAN ‘Community’ can be built without engaging the interests of ordinary ASEAN people.

Hence, it is fitting that ASEAN-10 should be organizing a collective effort among its member-States to bring its vision and mission within the range of knowledge of everyday Southeast Asians....”

While the coming changes are a source of trepidation, they are also certainly opportunities to compete on the regional stage that we must seize.

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Philippines pins hope on fiscal incentives to promote oil and gas industry

By Pacific Strategies and Assessments

T

he Department of Energy announced in January 2014 that it is considering offering additional fiscal incentives to oil and gas exploration companies to encourage them to invest in the Philippines.

The proposal came amid the department’s preparation for the Philippine Energy Contracting Round 5 where the government will bid and offer to oil and

22 Philippine Resources

gas companies areas with prospective petroleum reserves for exploration and development. The department said it will launch the contracting round within the first quarter of 2014.

recover costs of exploration projects from proceeds of other existing service contracts. Energy officials said this incentive will encourage companies to conduct more exploration activities.

The contracting round is one of the Philippine government’s strategies to develop the upstream and downstream oil industry and eventually develop local petroleum resources to lessen dependence on fuel imports.

Although there has been no final decision on the proposals, the department is hoping that fiscal incentives will make the Philippines a more attractive destination for oil and gas investments.

One of the proposals for incentives that energy officials are currently considering and have been pushing for since 2012 is allowing “ring fencing”, a process where oil and gas companies will be allowed to

The Philippines imports at least 90 percent of its fuel, making local prices vulnerable to the world energy market. In 2012, the Philippines imported 119.7 Continued on page 24>

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<Continued from page 22 million barrels of petroleum products, which cost US$13.86 billion.

There currently are only two oil and gas projects in the Philippines that are of commercial scale: the Galoc oil field and the Malampaya natural gas field.

The Malampaya natural gas project in northwestern Palawan is operated by a consortium composed of Shell Philippines, Chevron, and government-owned Philippine National Oil Co (PNOC)— Exploration Corp.

It accounts for 40 percent of the energy requirement of Luzon Island and supplies gas to three power plants in Batangas with total capacity of 2,700 megawatts.

The government estimates that the Malampaya reserves will be depleted by 2020.

The Galoc oil field, offshore northwestern Palawan is operated by Galoc Production Co, a subsidiary of Australian firm Otto Energy Ltd. As of December 2013, the oil field produces 14,500 barrels of oil per day. Otto Energy said the oil field can supply oil through 2020.

The Department of Energy launched the Philippine Energy Contracting Round 4 in 2011 and offered 15 petroleum contracts to potential investors. The Department of Energy received 20 offers for 11 service contracts but only four of them qualified.

As of December 2013, four service contracts have been awarded to companies: • Area 1 in the Cagayan Basin that was awarded to Australian firm Planet Gas Pty Ltd. • Area 5 in northwest Palawan awarded to Pitkin Petroleum Plc and The Philodrill Corp.

• Area 7 in the Mindoro-Cuyo basin awarded to NorAsian Energy Philippines Inc. • Service Contract 75 in Northwest24 Philippine Resources

ern Palawan awarded to a consortium composed of Philex Petroleum Corp., PNOC-Exploration Corp. and PetroEnergy Resources Corp.

Oil and gas companies are also afraid of possible harassment from China once they begin exploration activities near or within the disputed territories.

Among the current incentives offered to petroleum service contractors in the Philippines are exemptions from all taxes except income tax, payment of income tax through the government share, cost reimbursement of up to 70 per cent gross production with carry-forward of unrecovered costs, exemption from all taxes and duties for importation of materials and equipment for petroleum operations, and incentives for consortium with 15 percent Filipino participation.

In 2011, the Philippines accused Chinese patrol boats of harassing an oil exploration vessel in the Reed Bank, which is located east of the Spratlys Island Group.

Offering incentives to oil and gas companies can raise investor interest in the Philippines but these fiscal measures may not be enough to convince them to make the multi-million dollar investments needed to fund oil and natural gas activities, which could address the urgent need to develop new sources of energy amid the depleting resources of the Malampaya and Galoc reserves. Analysts question whether or not the current government shares this sense of urgency?

Fear of possible tensions that may arise from the protracted territorial dispute involving the Philippines, China, Taiwan, Vietnam, Malaysia and Brunei over the potentially resource-rich Spratly Islands Group in the South China Sea (locally known as West Philippine Sea) will continue to make investors cautious about exploring near these areas.

The Philippines, one of the more vocal claimant countries, has sued China before the International Tribunal on the Law of the Sea in 2013 and challenged the Chinese government’s territorial claim.

Major international oil and gas exploration companies also would likely not sign up for a Philippines petroleum service contract if it means attracting China’s ire. These companies could place their investments in China at risk and face possible backlash from the Chinese government.

In the past, Philippine businessman Manuel Pangilinan of Forum Energy wanted to negotiate a joint Philippine-China exploration and production project in the Reed Bank.

While the Chinese seemed receptive to the idea, the Philippine Department of Foreign Affairs has steadfastly refused to entertain this proposal, citing threats to Philippine sovereignty claims and a potential violation of the Constitution.

Red tape in the bureaucracy also turns off potential investors. Delays in the processing and release of local government permits and endorsements can affect the work plan of oil and gas companies and open opportunities for political interference.

Australian firm BHP Billiton, for instance, encountered delays in its drilling activities in its project offshore northwestern Palawan due to the slow processing of strategic environmental plan from the Palawan Council for Sustainable Development, a multi-sectoral body that implements environmental laws in Palawan.

Fiscal incentives may slightly improve the Philippines image to oil and gas investors but these cannot outweigh the challenges posed by bureaucratic delays and the ongoing political tensions in the South China Sea. PSA conducts specialised industry research and generates customized reports covering a broad range of client interests. PSA also conducts focused security, socio-political, economic, as well as operational and business risk assessments across the Asia-Pacific. For more information, contact PSA at info.services@ psagroup.com

Economic Commentary February 2014 - April 2014

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Philippines dubbed as the “New Asian Tiger” in 2014 Investment Forum Philippine Resources reporter Maria Paula Tolentino attends the recent Philippines Investment Forum in Manila.

the underlying strength of the Philippine economy and that it remains strong despite setbacks brought by natural disasters and siege.

E

He mentioned that “Just 15 days after our last encounter, the Fitch Ratings Agency...

Standard & Poor’s...and Moody’s gave their ratings. It has become unanimous: The Philippines is investment grade. In that period, our economy performed in an equally stellar manner. Despite the disasters that befell our country in 2013, the Philippines still posted one of the fastest growth rates in Asia at 7.2 percent.

uromoney Conferences, in partnership with the Department of Finance of the Republic of the Philippines, recently hosted the Philippines Investment Forum. Held last February 18, 2014 at Solaire Resorts & Casino, Manila, the forum was graced

by Philippine President HE Benigno S. Aquino III and Secretary of Finance, the Hon. Cesar V. Purisima.

Joined by 600 policymakers, business leaders, economists and key overseas investors, the forum focused on the country’s economic fundamentals and progressive reforms.

In his speech, the President mentioned

“Further, the Philippines continues to climb up the World Economic Forum’s Global Competitiveness Rankings, reaching 59th place, improving by a total of 26 spots. There was also marked improvement in the World Bank and International Finance Corporation’s Ease of Doing Business Report, moving up 30 places in

just one year. The Heritage Foundation in its 2014 Index of Economic Freedom, placed the Philippines 89 out of 178 countries—an eight-notch improvement from the previous year. While in a 2013 a survey of companies in Asia and Oceania, the Japan External Trade Organization said that the Philippines is the 2nd Most Profitable among ASEAN-5 countries, trailing only Thailand. This is particularly impressive, considering that in 2010, we were dead last,” Aquino said.

The President also encourages investors to open shop in the Philippines as human resource is also something to watch out for. He says “We are also making sure that, as a large chunk of our population hits working age, they have the wherewithal to take advantage of the opportunities that arise...”

“This ensures that when our children go to school, they will have suitably sized classrooms, tables, chairs, and materials to accompany them in their pursuit of knowledge—and that when they graduate, they will be properly equipped to take the jobs that are available.”

“It also sends a resounding message to all potential investors: If you invest in the Philippines, human capital will be the least of your worries.”.

The President invited everyone to play a larger role in the growth of their country - “Now, we are seeing so many international organizations and publications expressing optimism about our future, and they have already referred to us as ‘Asia’s Bright Spot,’ or as the ‘New Asian Tiger’.”

Aside from discussing capital market outlook, real estate, accelerating public and private partnerships, infrastructure development and the potential of the gaming industry, the 2014 Philippine Investment Forum also discussed energy & power solutions for the Philippine Archipelago as featured here in Panel number VI.

26 Philippine Resources

He ended on a light note encouraging everyone to be present “as our people pursue the permanence of our prosperity, on the road to becoming an economy and a country greater than ever before”.

Community Resources February 2014 - April 2014

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Postcards of the Future from Jun Palafox – The Need for Effective Urban Planning in the Philippines By: Maria Paula Tolentino

W

ith the onslaught of super typhoon Haiyan in Tacloban, Leyte, leaving hundreds of residents without homes, and loved ones with more than thousands still missing, prominent Filipino Architect Felino “Jun” Palafox recently shared his insights into the huge importance of effective urban planning, architechture and engineering in a country that took such a beating in 2013.

PRJ: What is the connection between good architechture and good governance?

FJP: Good governance should be the enabler not the obstacle to having good architecture. Architecture should be designed and planned within the urban context of the city. So in essence, architecture is not an island but should always be part of the urban fabric. For a 50 year old tree, the replacement cost equivalent to Php9 million pesos.

The tree together with the beauty it gave the environment, the water it held, the life it gave the earth and the oxygen has the replacement value of Php9 million pesos.

I mention this because I had to give up a Php9 million dollar deal in Subic with their purpose to destroy around 366 year old trees in a 10 hectare property. I

turned it down to save the trees. International media was surprised that there was an architect in the world that would turn down such a deal.

PRJ: Please expound more on “Re-Century”: FJP: This century will not be all about new development but more of re-development. Re-imagine, re-plant, re-architecture, re-engineer, re-develop, re-use, recycle, and hopefully in the future, urban renaissance. Our city is continouosly being renewed and redeveloped, while hopefully reaching urban renaissance.

PRJ: You mentioned that you see an “opportunity” in the disaster (Typhoon Haiyan) that recently happened in the Philippines: FJP: The flood crisis is an opportunity because it will help correct the mistakes of the past, lessen the mistakes made – like flooding and improperly planned cities.

The crisis is an opportunity for change: to incorporate the best practices in the world and learn from mistakes made in the past.

PRJ: “We should address hazzards before they become disasters” - What is the role of urban planning in this set-up?

FJP: Given the past administration, we’ve made more than 80 recommendations on how to address hazzards before they become disasters through urban planning, architecture and engineering.

That includes urban planning with the likes of right land use and evacuation areas that are disaster proof. In connection to the Tacloban disaster, with a population of more than 300,000, they should

Filipino Architect Felino “Jun” Palafox.

28 Philippine Resources

Continued on page 30>

Community Resources February February 2014 2014 -- April April 2014

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< Continued from page 28 have at least 300,000 square meters of evacuation areas or 30 hectares, maybe around 10 hectares each.

And in that 10 hectare evacuation area, we should have atleast emergency clinics, water stations, food stations, shelter, emergency telecommunications center, and even an emergency helipad.

Some mayors in Metro Manila, when I send them the post-cards of the future, most of them admire us instead of getting insulted. They see the potential for their respective cities and what it could become given the right resources. I took the risk.

PRJ: “Postcards” is definitely innovative but is it realistic?

So all of these things should be done at the planning stage. Similar to what we did in San Juan, where before we started urban planning, we asked for hazard maps for flood over lay zoning. Circling back to Tacloban, we should have at least a 50 meter setback from the high water mark.

FJP: We did get the Pasig river project.

We pitched the postcard for the Pasig River. And with our post-cards of the future, some agencies funded the Pasig River project. So it is definitely working.

PRJ: “More corruption and poverty means more casualties” - How true is this?

FJP: People have asked me that. But I have always felt that I am just like any other working class architect. Which is why it surprises me that last June, Forbes Asia magazine named me as one of the 482 heroes of the Asia (similar to the ranks of Henry Sy & Gokongwei).

FJP: I have observed 63 countries in the world, and have done projects in 38 countries, and lectured in 16 universities (which include Harvard and MIT) and I have helped in the rehabilitation of disaster areas like earthquakes that happened in Iran, the Indian Ocean Tsunami in Sri Lanka, Indonesia, San Francisco, Osaka, Japan and other different places in the world.

I have been observing that if you benchmark some countries that are more corrupt or had more poverty against the same magnitude of disasters in California or Japan, in delicate terms, countries that are more corrupt has had more poverty and more casualties. So we really have to address this.

PRJ: Please explain more on your project called “Postcards of the Future”?

FJP: This project has become an advocacy now. The strategy is, instead of talking too much, why not put them in pictures?

An architectural perspective, if you will.

A picture speaks a thousand words. It also sets a more “reflective” tone to those who see these postcards.

30 Philippine Resources

PRJ: Do you think of yourself as a “Renaissance Man”, a visionary?

Being ranked as the top 100 architects of the world by World Archictechture Magazine, and people ask me how come I don’t have my own building? I tell them it’s because the money gets donated.

Or there is profit sharing, and even to my own messengers and drivers not just the partners of the company. If there is excess income, I distribute it. Because when its my time to go, I won’t be able to bring the money.

Every November 1st, when we go to the memorial parks, with manicured gardens and expensive mauseloums, and at the very perimeter of the memorial park you can see squatter shanties, I can’t help but ask myself, as an architect and urban developer “We as a society would build monuments for the dead, and we can’t even provide decent housing for the living?” It just bothers my conscience. My chosen profession should be an extension of my desire to help the underpriviledged.

Bravery and faith

Forbes Magazine went to my US office and computed the value of the patriotic architectures I made. Architecture for humanity, architecture for the poor, they even computed the architect fees I’ve been donating not just in the Philippines but in other countries like Iran, Sri Lanka and Indonesia that have been hit by disasters.

And then they computed the value which was equivalent to the contributions of the “Titans”. I myself did not realize that it would amount to that. And I don’t call it pro-bono, rather “patriotic architecture / democratic architecture”.

PRJ: You mentioned that out of all your contributions, you get psychologicial income from all of these?

FJP: Given the opporunity to help the poor and the underpriviledged, it does give me happiness - psychological income, if you will. Development is not worthy of a name unless it is spread evenly like butter on bread.

Bravery and faith in the midst of natural disasters, poverty, government corruption and the uncertain, Mr. Palafox is certainly holding his own and showing fellow Filipinos and the world over, what it really means to be a “Bayani”.

Arch. Felino ‘Jun’ Palafox Jr. is the Principal Architect and Managing Partner of Palafox Associates, a multi-disciplinary firm he founded in 1989. Known for his advocacies for the environment, Arch. Palafox is the presidentelect of the Philippine Institute of Environmental Planners (PIEP) for 2013 and 2014.

He has lectured in 16 countries in Asia, Europe, and North America. He earned his Architecture degree from the University of Santo Tomas and his Masters in Environmental Planning from the University of the Philippines. He also holds seven diplomas from Harvard University’s Graduate School of Design.

February 2014 - April 2014

www.philippine-resources.com

Jimbo joins Phil Resources team

P

hilippine Resources is pleased to announce that Jimbo Owen Gulle has joined its editorial team.

Jimbo, who was previously with the

Chamber of Mines of the Philippines, where he was briefly the communications manager., joins our quality team of reporters that also includes Maria Paula Tolentino and Steve Hill.

A journalist and editor for the last 20 years, he started out as a sportswriter for the Manila Standard (now the Manila Standard Today) straight out of high school. He moved to Malaya, then became sports editor of The Manila Times in 2003. He later joined Business Mirror in between stints as a congressman’s aide and a media consultant for PAGCOR, the Philippine casino regulator.

He was also Associate Editor of Entrepreneur Magazine Philippines for 4 years; before that he was managing editor of The Jeepney magazine, a “street paper” that gives jobs to the homeless and the poor.

There, he won an award from the International Network of Street Papers for his interview-story of Gawad Kalinga founder Tony Meloto.

Philippine Resources 31

Community Resources

February 2014 - April 2014

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Water as “Liquid Gold”: European Chamber’s Water Forum Challenge By: Maria Paula Tolentino

I

n a natural cycle, rainwater falls from the clouds, returns to the salty sea through freshwater rivers and evaporates back to the clouds.

Regardless of how the water gets used during that cycle, it always ends up back in the sea at some point.

The issue here is: the distribution and management of water and the cost of getting it to everyone. If you live where it doesn’t rain, or where it doesn’t flow naturally, then someone has to get it to you. And that’s not cheap, practical or even possible. Over time we end up exhausting the technology to get water where it doesn’t naturally occur.

The earth’s population is growing but the earth’s supply of water is constant. Seventy percent of the world’s fresh water is already being used for agriculture. The same amount of water will be needed to support agriculture for 2.7 billion more people by 2050. Thus, water is increasingly being viewed as a finite natural resource that must be carefully managed.

It is estimated that by 2025, two-thirds of the world’s population could be living under the stress of water scarcity.

The European Chamber of Commerce brought into light the need to address this concern, to raise awareness, and in

the long run, prevent such catastrophic needs. ECCP Vice-President and General Manager Martial Beck discussed with Philippine Resources journal the importance of saving and managing this golden liquid.

PRJ: What is the role of ECCP in this water challenge?

MB: We believe that there are so many stakeholders in the Philippine water sector who seem unable to coordinate their acts in an efficient manner. ECCP saw the crucial need to bring several stakeholders together in the same room so that they can share their perspectives on water, from supply to waste product treatment and water utilities from government. ECCP is basically trying to achieve a platform where people can talk and exchange views, learn to connect with each other and then hopefully, work together so that our water supply and our waste product treatment will be a lot more efficient.

PRJ: Why the focus on water?

MB: The interest of ECCP is sustainability. What we are really trying to achieve here is to raise awareness about certain resources. We realize that if it is not managed properly, there will be a time when water won’t be enough anymore.

We sometimes have the same situation

here [Philippines]. There is not enough water and sometimes, there is too much wastage of water. So the objective is to really raise awareness. There are also other key sustainability areas the Chamber is very much engaged in: energy efficiency, renewable energy and of course, water.

PRJ: Can you elaborate more on “Blue is the new green”?

MB: For the past few years, there have been so many companies that say “this product is green”, “this technology is green”, coal became “green”. Basically, we want water to be looked at as something very valuable and similar to the slant “Liquid Gold”. Water is very valuable because it is not renewable, it is not infinite.

If water is not taken care of, the price of water will go up and there will be more people suffering from bad quality water.

PRJ: What is the effect of lack of water to an economy?

MB: Water in most industrial zones, at least where manufacturing is concerned, is available at a reasonable price, unlike energy. We know that energy consumption and energy prices are very high, and that in itself is a problem.

With water, we don’t have the same situation yet. But it’s because of this reason that we don’t want to get into that situation where water will become more expensive. This is why we decided to do this forum because we want to start, as early as now, to think about ways on how to keep water at a reasonable price.

Water is not expensive, not yet. It may not be expensive for industries but paradoxically, it is very expensive for the poor (people who get water by the bucket for example or those that transport it for long distances). They are the ones who

Integrity Initiative founder Henry Schumacher addresses Water Forum.

32 Philippine Resources

Continued on page 34>

Mining News February 2014 - April 2014

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ADB supports comprehensive review of “Local Government Code”

F

or the first time since its enactment in 1991, the Philippines’ Local Government Code will undergo a governmentled, comprehensive review designed to boost municipal revenues streams for the provision of better basic services and to assist local economic development and job creation.

The review is the centerpiece of a US$250 million loan approved today by the Board of Directors of the Asian Development Bank (ADB) in support of local government finance and fiscal decentralization reforms in Philippines.

“The Philippines has taken significant steps to improve the financing system of Local Government Units (LGUs) and to foster transparent and accountable local governance practices. Reforms should help raise revenues and therefore improve services,” said Juan Luis Gomez, Senior Public Management Specialist at the ADB’s Southeast Asia Department.

Despite these efforts, weak local tax bases and flaws in the design of transfers make it hard for poorer local governments to deliver the services their constituencies require. As a result, regional disparities in living standards remain wide. This could be efficiently addressed with a review of the Local Government Code.

LGUs represent close to 17% of total government expenditures and play a critical role in the provision of basic services like health, education, or housing and community development.

Performance-based The reforms include performance-based mechanisms such as the Performance Challenge Fund, which ties greater access to funding to performance, and the “Bottom-up-Budget,” which can improve budget transparency and alignment of national and local development priorities.

Program reforms will also continue implementation of accountability mechanisms, such as the Full Disclosure Policy or the Citizen’s Satisfaction Index. Lastly, the program supports the government’s efforts to improve local financial management systems.

The reform program will receive parallel cofinancing of $150 million from the Agence Française de Developpement. < Continued from previous page pay the highest price.

PRJ: How can the Chamber help bring the importance of water supply and management to light?

MB: We are bringing together in this forum companies that have the technology and the know-how to use water in a way that is sustainable and efficient. For example, just this morning, we had ARUP talk on how they could save as much as 70% of the cost of water in one place.

This can be done through a design they made for the whole water system: water supply, waste water treatment, the use of rain water. When you bring in that kind

34 Philippine Resources

of knowledge, that experience of how to take really good care of water, then that is how we [ECCP] are contributing.

PRJ: Are we looking forward to another water forum?

MB: We will definitely hold more in the future. We will have meetings on people focusing on water supply and waste water treatment. We will also meet with people who are interested in flood mitigation.

Water, being a natural resource, is as abundant as sunshine and wind. However, water isn’t really infinitely renewable if it doesn’t occur near where one lives.

Therefore, the need to adopt a “green” strategy for areas where water doesn’t occur naturally is crucial. ECCP is playing

a big role in helping open that door.

Martial Beck is the Vice President and General Manager of the European Chamber of Commerce of the Philippines (ECCP). ECCP is a service-oriented organization whose main goal is to foster close economic ties and business relations between the Philippines and Europe.

The ECCP does this by providing a wide range of business services and by creating linkages between companies, organizations and individuals with existing or potential business interests in Europe and the Philippines.

The ECCP sees itself as the stepping stone for Europeans into the Philippine market and for Filipinos into the European market.

Mining Briefs February 2014 - April 2014

www.philippine-resources.com

Philippine mining briefs: by Jimbo Gulle Atlas Consolidated Mining and Development Corp. has completed the expansion of its subsidiary Carmen Copper Corp.’s copper processing plant in Toledo, Cebu.

In a press statement and a disclosure to the Philippine Stock Exchange, Atlas said Carmen Copper’s initial commissioning works for the plant ran successfully for 60 hours or 2.5 days starting January 31, giving it “high confidence in the equipment performance and proof of process of the expanded plant.”

Carmen Copper’s tests covered the test run for all equipment installed in the 1,675-hectare Toledo mine, Atlas investor relations head Michael Garcia told GMA News Online.

“The data process provided us good results, showing satisfactory copper recovery and grind size accuracy,” Garcia added in the GMA report.

The test run for the remaining process circuit was finished in February and the whole processing plant is expected to be fully operational by March 2014.

The expansion increases the milling capacity of the existing plant by 50 percent, or from 40,000 tons per day (tpd) to 60,000 tpd.

The major components installed for expansion are two units of 19x31 (feet) ball mills, four 300-cubic meter rougher flotation tanks, and an auxiliary line for primary crushing with a capacity of 30,000 tpd. An auxiliary line will augment the existing primary line, which has a capacity of 50,000 tpd.

Two years ago, Atlas executive vice president Adrian Ramos said the company would invest about US$105 million (Php4.4 billion) to upgrade the mill facility of Carmen Copper’s complex in Toledo, allowing the wholly-owned subsidiary to raise its monthly output to 10 million pounds of copper concentrate from 7.5 million pounds.

36 Philippine Resources

XXXX Alsons Energy Development Corp. (AEDC) is still keen on putting up a 400-megawatt power plant for the Tampakan copper-gold mine in South Cotabato despite the impending pullout of global resource giant Glencore Xstrata from the troubled US$5.9-billion project.

Alsons Energy executive vice president Tirso Santillan said that while Glencore’s recent decision to divest from “greenfield projects” such as Tampakan would lead to the delay of the project, AEDC anticipates that the mine “will eventually commence operating in the future.”

Santillan stressed in a BusinessMirror report that the power project is dependent on the mining project, operated by Glencore subsidiary Sagittarius Mines Inc. (SMI).

“The further development of the prospective 400-MW power station to service the Tampakan mine project is, of course, contingent on the mining project pushing through,” he added.

In March 2013, Alsons signed a supply agreement with SMI to develop an opencycle gas turbine and coal-fired power station. The facility is expected to start generating power by 2017 but will only be fully operational by the middle of 2019, the BusinessMirror report added.

However, Glencore has told its minority partner in SMI, Indophil Resources NL, of “its preference to pursue divestment of its interest in Tampakan,” which the latter confirmed in its quarterly report for December 2013.

a greenfield project because it has yet to reach the production stage, despite SMI’s predecessors getting a mineral permit as early as 1995.

Commodities giant Glencore has considered divesting Tampakan since April 2013, according to the Indophil quarterly report. It was seen as necessary in order to fulfil conditions set by the Chinese government to approve its merger with the Swiss mining company Xstrata.

Glencore currently holds 62.5 percent in SMI, while Indophil holds a 27.5 percent stake.

XXXX The host towns of Philex Mining Corp. in Benguet have decided to team up to collect over a billion pesos in taxes from the Philippines’ largest miner.

In a joint resolution, the towns of Tuba and Itogon agreed to collaborate to force Philex to pay P1,361,451,514.11 representing business taxes unpaid since 2002 – a joint assessment of both towns’ treasury offices, according to a SunStar Baguio report The move revives a tax dispute in 2012 that Philex was willing to resolve with both towns, but the mining company held the payments in escrow in August that same year because Itogon and Tuba could not agree on how to share the tax proceeds.

Philex “had been exploiting the boundary dispute between Itogon and Tuba by always raising ‘jurisdictional issue’ to justify its unwillingness to pay,” the resolution added.

AEDC, a subsidiary of publicly-listed Alsons Consolidated Resources owned by the Alcantara family, earlier said it would put up the 400-megawatt facility at the Kamanga Agro-Industrial Ecozone in Brgy. Kamanga, Maasim town in South Cotabato.

Philex’s Padcal tailings dam and mill site stand on a disputed boundary area being staked by Itogon and Tuba, according to a Philippine Daily Inquirer report.

The Tampakan mine project is considered

Continued on opposite page >

Ike Rodriguez, Philex vice president for legal affairs, had said a resolution of

February 2014 - April 2014

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< Continued from opposite page

Palangdan said.

boundary disputes had to be settled before any payment is made.

“We will be forced to issue a closure order if the Philex management will not act on our bid to collect the business tax they owe us since 2002,” Palangdan added.

However, the town councils said the boundary dispute between Itogon and Tuba “has taken its place in the history of these local government units, and yet for over 50 years no case has been filed in court simply because of our strong adherence to the principles of amicable settlement as a way of settling disputes.”

Tuba Mayor Florencio Bentrez, in a previous interview with the Inquirer, said officials of the two towns agreed to split their share from excise taxes accrued from Philex’s operations, but not fees paid for permits.

“Philex has been using our boundary dispute as an excuse to evade paying their debt but we already have reached an agreement,” Itogon Mayor Victor

Tuba Councilor Gary Behis confirmed to the Inquirer that a joint resolution exists, but said Tuba is also negotiating separately with Philex about its financial obligations.

XXXX Catanduanes province and Cagayan de Oro City are the latest areas tabbed by the House of Representatives as mining-free zones.

On February 3, the House approved on third and final reading House Bill (HB) No. 45, filed by sibling lawmakers Ca-

gayan de Oro Rep. Rufus Rodriguez and AbaMin Partylist Rep. Maximo Rodriguez Jr., and HB 670 filed by Catanduanes Rep. Cesar Sarmiento.

Both bills aim to “avoid the adverse effects of mining to both humans and the environment and to prevent flash floods from recurring in the area” according to a BusinessWorld report. They were transmitted to the Senate soon after for deliberation.

In explaining their bill, the Rodriguez brothers said mining adds toxic chemicals in processing ores and “strips off large areas of top soil of all flora and fauna.” They had blamed recent flash floods in Cagayan de Oro on mining operations.

Sarmiento, meanwhile, sought “to preserve and safeguard the environment and the people of Catanduanes from the Continued on following page >

Philippine Resources 37

Mining Briefs February 2014 - April 2014

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< Continued from page 36 harsh effects of mining” with his bill. He also said mining has been “statistically proven to be one of the most environmentally destructive industries.”

While all mining operations would be prohibited in both areas, both bills exempt quarrying of gravel and sand for projects “directly undertaken by agencies of the national and/or local government” that includes construction of roads, bridges, school buildings, water and energy utilities, and similar public works.

Violators of the proposed laws would be imprisoned 6 to 12 years and fined P100,000 to P500,000. In case the violator is a corporation or association, its president and managers or its agent or representatives in the Philippines (in case of a foreign corporation) would be held liable.

Top officials of the Philippine Chamber of Commerce and Industry (PCCI) expressed alarm over the passage of the bills, saying they hoped it would not be a precedent for continued “arbitrarily identifying mining-free zones.”

“This will only further fuel instability and uncertainty on the part of the business community,” PCCI chairman Miguel B. Varela told BusinessWorld.

“Our position has always been that government should come up with a map that will categorically delineate which areas are exclusively for agriculture and ecotourism, and okay for mining and minerals exploration,” Varela added.

PCCI President Alfredo M. Yao told BusinessWorld via text message that the bills would impact the Philippine mining industry, but the areas concerned “were not major mine producers,” so the effect production-wise would be minor.

XXXX The Philippines needs to produce more mining engineers to meet the industry’s require-

38 Philippine Resources

ments both here and abroad, as fresh graduates only meet about a third of the growing demand each year.

Engr. Caesar Lao-as, president of the Philippine Society of Mining Engineers (PSEM), said in a SunStar Cebu report that the shortage of mining engineering graduates is adding to the country’s burden of growing its mining industry.

According to Lao-as, the Philippines produces 60 to 70 mining engineers a year, which is “way below” the 200 engineers needed annually on average. PSEM is also alarmed by the exodus of Filipino graduates and mining experts to foreign mining companies and higher paying jobs in Vietnam, Thailand, Australia and Canada, he added.

“The Philippines is now the hottest investment destination for mining operations,” said Lao-as, also president of Cebu-based Asia Pacific Energy Resources Ventures Inc, as quoted by SunStar. “Sadly, the industry is facing a shortage, we are losing some to foreign mining companies and we need more mining engineers very badly.”

The talent drain is despite mining engineering being one of the country’s highest-paid professions. Lao-as said the current entry-level monthly salary in a Philippine mining company ranges from P40,000 to P50,000. However, it still pales to the pay in other countries, where licensed mining engineers can get an average of US$3,000 to US$5,000 (Php134,000 to Php224,000) every month.

XXXX Atro Mining-Vitali Inc. has been cleared of allegedly contaminating rivers and coastlines near its exploration site in the mountains of Zamboanga City after an investigating panel formed by the City Council found a virus actually killed prawns and crabs in barangay Vitali along the city’s east coast.

In a Zamboanga Today news report, the city’s agriculture and fishery experts said the Whitespot Syndrome Baculovirus (WSSV) actually caused the “shrimp-kill” in Vitali and not Atro’s exploration activities for iron ore, chromite, nickel, copper, gold, silver, lead, zinc, manganese and other minerals as alleged by some locals.

The village had experienced a similar WSSV outbreak in September 2011, local records showed.

A group of city councilors inspected Atro’s 2,000-hectare mine site on February 15 with officers of the regional Mines and Geosciences Bureau and the media and only found “clean and clear water” along the river in Vitali.

Previously, the Council had pondered revoking Atro’s social permit to explore Zamboanga City’s mountains after residents complained of the shrimp kill and skin infections from using the river.

“We found out that there is nothing irregular with the exploration activities of the company as it complies with all the requirements and guidelines of the MGB,” Councilor Charlie Mariano, chairman of the council’s Committee on Environment and Natural Resources, was quoted as saying by Zamboanga Today.

XXXX What’s the future of mining in the Philippines? “For the moment, none.”

That was the exact reply of Manuel V. Pangilinan, chairman of Philex Mining Corp., to a follower of his on Twitter as the top man of the country’s largest miner – and several other businesses in his MVP Group conglomerate – took time out to reply to questions posted to his personal social media account.

For about an hour in the evening of February 17, Pangilinan found himself with “some rare free time” and decided to spend it by fielding queries to his Twitter handle @iamMVP, which has over 68,000 Continued on page 40>

Mining Briefs

February 2014 - April 2014

www.philippine-resources.com

< Continued from page 38 has 70k mw of wind farms. Phils cap it at 200mw.”

He also doused speculation on whether he would run in the 2016 presidential elections, telling a Twitter fan “no politics in my blood.” He did note that Philippine business was unique compared to the rest of the world in that it is “infested with politics.”

Pangilinan also revealed that he was writing an autobiography, but that it “would have to be published posthumously. Maraming tatamaan (Many will be affected),” he tweeted.

XXXX

followers.

One of the questions came from noted mining blogger Pinoy Minero (@RsponsibleMiner), who asked “#InterAksyonWithMVP @iamMVP What’s the future of #mining in the PHL?”

Australian firm Red Mountain Mining has raised over A$2.4 million (about Php 96 million) from its Share Purchase Plan (SPP) to help fund drilling at its promising Lobo project in Batangas.

In a report by Proactive Investors, Red Mountain extended the $700,000 cap of its “heavily oversubscribed” SPP to $2,454,771, highlighting “the strong support from its shareholders.”

Pangilinan’s succinct reply to Pinoy Minero was one of his many sometimesserious, sometimes tongue-in-cheek, yet all-candid answers to questions ranging from his MVP Group’s operations and plans to hypothetical situations and even his favourite food – to which he replied “pork chop.”

The company received valid applications for A$2,767,500 worth of shares from 328 shareholders and will apply a 11.3% pro rata scale back to all applications, the report added. Red Mountain thus issued 144,398,375 new shares, which were expected to be allotted last February 12.

In perhaps a bit of advice to his fellow executives both in mining and outside it, MVP told another follower, @notty_romero, that CEOs “should communicate, be open and transparent. They should have nothing to hide. Masaya kaya mag-tweet (it is fun to tweet).”

Trenching at Lobo has returned numerous high-grade assays of 4.9 meters at 24.9 grams per tonne gold including 0.5 metres at 136.9g/t gold; 1.75 metres at 41g/t gold including 0.5 metres at 125.5 g/t gold; and 1.8 metres at 55.9g/t gold including 0.9 metres at 110.9g/t gold.

On the energy front, follower @JarJarPips asked Pangilinan: “Do you think renewables will get any traction here in the Philippines?”

Red Mountain’s SPP, which was partially and conditionally underwritten to A$250,000, follows a A$1.02 million placement to professional and sophisticated investors.

MVP replied: “Only if we raise the limits on renewables. China for example 40 Philippine Resources

XXXX

OceanaGold Corp., which operates the first large-scale copper-gold mine in Didipio, Nueva Vizcaya, is increasing its capability to conserve water resources and implement effective water management in the area by partnering with an Australian environmental non-government organization.

OceanaGold managing director and chief executive Mick Wilkes said the company has linked up with Brisbane-based International River Foundation (IRF), which works with partners around the world to fund and promote sustainable restorations and management of river basins.

“With this strategic step, along with our continued collaboration with the communities, academe and government in environmental efforts, we believe more results can be achieved,” Wilkes said.

In a statement, the IRF said the aim of its partnership with OceanaGold “is very clear: we want to create a better environment and social conditions to people relying on rivers for agriculture, for drinking water and daily needs.”

IRF and OceanaGold are expected to educate Didipio and Nueva Vizcaya residents in minimizing adverse impacts from small scale mining operations and become “champions in sustainable river basin management.”

Communities have lived along the Didipio River since at least the 1970s, when gold was first discovered in the area.

XXXX The road network developed

by OceanaGold (Philippines) for its mining operations in Nueva Vizcaya has not only helped it deliver its mineral concentrates to clients quicker, but has also helped farmers in the area bring their agricultural goods to marContinued on opposite page>

Mining Briefs

February 2014 - April 2014

www.philippine-resources.com

< Continued from opposite page

ald Gamboa, general manager of Didipio Corp. (DiCorp).

ket easier and faster.

“Farmers in Barangay Didipio (the OceanaGold mine site in Nueva Vizcaya) find it more convenient to transport their farm products now because of the all-weather road established by the mining firm,” said Mario Ancheta, Mines and Geosciences Bureau director for Cagayan Valley, in a BusinessMirror report.

The 22-kilometer upland highway “was designed according to world-class mine safety standards,” added Ancheta, who noted that while the road was opened in the neighboring Quirino province, the direct beneficiaries are the locals of Nueva Vizcaya.

Paving and maintaining the road network not only employs a lot of local workers, but farmers in Didipio now have the convenience of welcoming buyers right at their farm gates because of it, said Ger-

DiCorp, which also provides daily shuttle services for OceanaGold employees from as far as the Nueva Vizcaya capital of Bayombong, also transports daily food stocks for the mining company’s 1,700 employees.

XXXX The Power Sector Assets and Liabilities Management Corp. (PSALM) will sell the government’s contracted output with the Mt. Apo geothermal plants in Mindanao by the third quarter of 2014.

In a report on Interaksyon.com, PSALM president and CEO Emmanuel R. Ledesma Jr. said the agency’s board has cleared the selection and appointment of the independent power producer administrator (IPPA) bidders for the Mt. Apo 1 and 2 geothermal plants.

During the meeting of the PSALM board of directors on January 29, Ledesma said they had been given “the authority to commence the sale process for the Mt. Apo IPPA selection, and we plan to conduct the bidding in the third quarter of this year.”

PSALM will also adopt the same legal and commercial sale structures that it used in the selection and appointment of the IPPA for the bulk energy of Unified Leyte Geothermal Power Plant, which the agency bid out in 2013, Ledesma added in the Interaksyon report.

The Mt. Apo IPPA will manage two government contracts with the Mt. Apo 1 and 2 geothermal power plants rating contracted energies of 390 gigawatthours (GWh) and 398 GWh per year, respectively.

Each with a rated capacity of 54.24 megawatts, the geothermal plants--on the country’s highest mountain--are located in Kidapawan City, North Cotabato.

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Philippine Resources 41

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February 2014 - April 2014

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Indophil to take over the running of Tampakan

W

ith the restructuring of Sagittarius Mines Inc. (SMI) complete, Australia-based Indophil Resources NL is poised to take over the driver’s seat of the Tampakan mine operator after its partner in the rich copper-gold project, Glencore Xstrata, expressed its desire to divest its majority interest in the US$5.9-billion undertaking.

By holding “a strategic pre-emptive right over Glencore Xstrata’s interest” in the mine located in South Cotabato province, Indophil has a considerable say in any Tampakan divestment process, the company said in its December 2013 quarterly report.

The Tampakan Project is operated by SMI, whose 40% controlling equity is a joint venture between Glencore Xstrata (which holds 62.5%) and Indophil (37.5%). The 60% non-controlling equity shareholders of SMI are the Tampakan Mining Corp. and Southcot Mining Corp.

Indophil and its “in-country alliance partners” remain optimistic that “the pathways for the development of Tampakan will be cleared and value for the shareholders will be restored” as talks continue for what would be the Philippines’ biggest foreign investment ever.

While the provincial ban on open-pit mining—SMI’s preferred method to harvest the mineral-rich resource—remains in South Cotabato, Indophil CEO and managing director Richard Laufmann said “there are positive signs” the project would push through.

“The remaining approvals to development are now the focus of Philippine Government attention via a speciallyformed inter-agency working group,” the company chief told investors.

42 Philippine Resources

Laufmann also noted SMI’s work plan for 2014 and significantly reduced expenditure that was approved by SMI’s Board of Directors in December 2013.

That approval, according to Sagittarius spokesperson Manolo T. Labor, “demonstrates the continuing support of shareholders for SMI’s work in moving the Tampakan Copper-Gold Project forward.”

Indophil revealed that SMI’s planned 2013 expenditure “went from a full-year budget of US$54 million (Php2.4 billion) to an actual 2013 expenditure of US$33 million (Php1.47 billion), which saw a massive readjustment in activities and objectives.”

“The plan for 2014 will now see total expenditure of less than US$10 million, with 60 employees and 60 contractors engaged,” Indophil added. The focus of activities on the ground “will be on maintaining local community support and clarifying with the Philippine Government the process and timeline for the remaining approvals required for the Tampakan Project to secure investor commitment to proceed to development.”

In other words, Labor said the key objective of the new Tampakan work plan “is to continue to engage the National Government and other stakeholders in order to define and agree on a pathway to achieve government approval of, and community endorsement for, the project.”

Labor is one of the handful of employees that remained with SMI after Glencore slashed funding for Tampakan effective September 1 last year. Approximately 1,000 employees and contractors were made redundant by the move.

It also requires numerous other government and community permits to be obtained, which the remaining group at SMI is focused on/

Saw it coming In a way, Indophil saw this coming, owing to commodities giant Glencore’s merger with (some say takeover of) SMI’s former parent company, Xstrata, in May of 2013.

Laufmann acknowledged that since April 2013, considerable uncertainty hovered over the future ownership of Tampakan, as Glencore Xstrata would be forced to divest its stake in the copper-gold mine as part of Chinese regulators’ conditions in order to secure the approval of Glencore’s merger with Swiss miner Xstrata.

That stance was enhanced when Glencore Xstrata CEO Ivan Glasenberg said last year his company wasn’t interested in “greenfield” developments like Tampakan, and indeed has been eager to drop several projects. These included its Las Bambas mine in Peru, which it must sell

by September 2014 to comply with Chinese regulatory conditions ahead of the merger.

Still, Glencore has not commenced any formal divestment process, Indophil noted. The Aussie firm is committed to maximizing value “either by development of Tampakan, 100% ownership of SMI or divestment.”

It also said it has an up-to-date data room, and Indophil “remains ready to assist in the divestment process so that value can be restored for all stakeholders, particularly Indophil shareholders.”

“We will work with Glencore Xstrata to assist in meeting objectives for the project, and Indophil remains focused on doing what it can to ensure the project license conditions are not compromised in this process,” Laufmann added in the quarterly report.

The Tampakan deposit is one of the largest known undeveloped copper-gold deContinued on opposite page >

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www.philippine-resources.com

Philex commits to Reforestation

P

hilex Mining Corp. said it has planted a total of 305,590 seedlings of various forestand fruit-tree species across 250 hectares of newly- and previously-established areas at its Padcal mine site in Benguet, and another 140 hectares of the previously established plantation areas for enhancement.

With its 2013 reforestation and agroforestry projects in Padcal, Philex Mining has now planted over 8 million seedlings of various forest and fruit-bearing tree species planted across 2,465 hectares of land in Itogon and Tuba towns in Benguet.

Meanwhile, Philex Mining also unveiled its calendar for 2014 that displays stunning pictures of its various mining operations across the country, underscoring its environmental compliance report.

Rudy Saguid, environment manager at Padcal, said Philex’s tree-planting project has not only helped in soil conservation, it also created income for the surface owners in Itogon, Benguet. <Continued from opposite page posits in the world. It holds an estimated 2.94 billion tonne mineral resources. The feasibility study SMI completed in April 2010 outlined a proposed 17-year mining operation that involves annual production of 450,000 tonnes of copper and 435,000 ounces gold over the first five years of its operation.

As Indophil reported in its previous quarterly report, SMI had requested the government’s Mining Industry Coordinating Council (MICC) to create a specialist Inter-Agency Working Group (IAWG) to play a lead role in resolving Tampakan’s key issues, including the South Cotabato ban “which the Philippine Government deems contrary to national law.”

Philex also has engaged these surface owners for plantation maintenance, following the site preparation and planting.

“Our focus was both on environmental protection and employment,” Saguid added.

in Itogon’s Barangay Ampucao.

Seven contractors, who are claim owners, have a three-year contract with Philex for the expansion of Padcal’s reforestation program since last year, Saguid said. Nine contractors, composed of landowners, have been in charge of Padcal’s agro-forestry project under a fiveyear agreement that runs until 2017.

“We also continue to maintain and protect these areas throughout the year,” said Saguid.

A total of 178,924 tree seedlings were planted on the newly established areas covering 175 hectares of the 250-hectare area spread across seven reforestation sites in Itogon’s Barangay Ampucao, while 62,592 seedlings of assorted forest and fruit trees were planted on the remaining 75 hectares allotted for agro-forestry.

Another 64,074 assorted seedlings were planted to enhance Padcal’s reforestation project done in the previously established 140-hectare area, Saguid said.

He stressed that besides propagating both trees and agricultural and horticultural crops in reforestation areas, Padcal has also been providing seedlings for, and participating in, the tree-planting activities of schools and local government units (LGUs) in Benguet.

An integration of fruit-bearing trees and lowland hardwood, the agro-forestry project covers the surrounding area of Padcal’s Tailings Storage Facility No. 3 (TSF). The reforestation project, on the other hand, is spread across seven sites

Last year, Philex Mining provided a total of 6,610 planting stocks/seedlings to the Tuba LGU; the Region 1 office of the Department of Environment and Natural Resources (DENR); Ligay Elementary School in Tuba’s Sitio Ligay, Brgy. Camp 1; Ampucao National High School in Brgy.

Ampucao, Itogon; the Philex Bikers’ Club; the scholars of Padcal who were studying in the various colleges and universities in Baguio City and Benguet; various civic organizations and private individuals.

“The IAWG has since been formed, and has met on several occasions to discuss these issues,” the Indophil report adds.

SMI briefed this group last November 8 and proposed that the MICC put up “a more permanent inter-agency group with the mandate to resolve each of the issues that requires the inputs from multiple national government departments and agencies.”

the Department of Environment and Natural Resources (DENR) and Department of Trade and Industry (DTI) as co-chairs, with the Departments of the Interior and Local Government, Agrarian Reform, National Defence, the Office of the Solicitor General, the National Commission on Indigenous Peoples and the Union of Local Authorities of the Philippines holding working group seats.

Indophil said the IAWG reported back to the Council in early January this year, “with a series of recommendations and a related timeline. SMI awaits the formal correspondence from the MICC on the details of these recommendations.”

Indophil said this process can deliver outcomes once the Philippine Government displays 1) a genuine and internationallycompetitive commitment to minerals development; and 2) as owner of the Tampakan deposit on behalf of the people of the Philippines, firm direction for project development.

The inter-agency group is comprised of

Philippine Resources 43

Energy News February 2014 - April 2014

www.philippine-resources.com

Gas2Grid takes big strides in Cebu oilfield

O

nshore Cebu oil explorer Gas2Grid has taken some more significant strides towards bringing its Malolos oil field to commerciality.

Earlier this year the company achieved a significant milestone when the Philippines Department of Energy (DOE) granted Gas2Grid’s aspplication to declare Malolos-1 as an oil discovery. This is an important technical legislative step in gaining the necessary approvals to eventually develop Malolos.

The DOE’s recognition of Malolos-1 as an oil discovery represents the first time that the field has been independently certified.

The DOE also granted a 12 month extension to the SC 44 permit in which Malolos is located to 28 January 2015 for the conduct of oil production test with the aim of establishing a commercial oil field.

The DOE approvals follow last year’s drilling success for Gas2Grid at the Malolos-1 well when the company successfully perforated and flow tested two oil bearing sandstones in Malolos-1 at depths of 2,219 to 2,227.5 metres and 2,178 to 2,195.4 metres.

Oil was produced on a short term test at indicative production rates of between 100 to 200 barrels of oil per day (bopd).

Oil from the lower sandstone also flowed to just below surface. These results were integrated with all other available technical data and resulted in the declaration of Malolos-1 as an oil discovery in October 2013.

Gas2Grid says the grant of the 12 month extension and the right to produce and sell oil is a big step forward in developing the oil field.

It also opens up further opportunities to investigate numerous other surface anticlines adjacent to the Malolos oil field.

Gas2Grid reported further positive news recently when it released an independent assessment of the “Unrisked Prospective Resource” within newly identified prospective leads within the SC 44 permit in which Malolos is located.

The study calculated there was potential recoverable oil in the range of 14 million barrels (Low Estimate) to 601 million barrels (High Estimate) with a Best Estimate of 104 million barrels. This resource is in the vicinity of Malolos and in addition to a “Contingent Resource” previously announced in June 2013 In the Malolos field, the “Contingent Resource” of oil in place in two productive sandstones has been reassessed upwards from the initial assessment made in June 2013 to be between 6.8 million barrels (Low Estimate “1C”) and 68.1 million

44 Philippine Resources

barrels (High Estimate “3C”), with a Best Estimate “2C” of 20.4 million barrels of “Total Oil Initially in Place”.

The independently assessed “Unrisked Prospective Resource” and “Contingent Resource” indicate the magnitude of oil resources targeted within SC 44 and their potential impact on the value of the company.

The Malolos oil field is located approximately 8 km by road from the western coast of Cebu.

Gas2Grid said oil transportation options from the Malolos oil field include road transport by a new, all weather, concrete road from the wellsite to coastal port options at nearby Aloguinsan (8km – less than 10 minutes) or the larger, established port of Toledo (32 km – 30 minutes).

The company reported that one option would then be to back-load onto empty oil refined products tankers after they have delivered refined petroleum to Cebu.

Gas2Grid said likely points of sale would be to either to one of the two oil refineries located in Batangas, Philippines (approximately 500 kms north) or into Singapore (approximately 2,500 kms south-west).

Local sale on the island of Cebu is also a possibility.

Gas2Grid is also further appraisal drilling of the Malolos oil field, including potentially re-entering the Nuevo Malolos-1, acquisition of additional seismic data and drilling of an Ilang-1 exploration well and new appraisal wells.

The company said it would look to completing a farmout to assist wiht the funding of appraisal and development work.

Energy News February 2014 - April 2014

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Otto searches for new partner after BHP pays up for leaving

O

ffshore Palawan explorer and producer Otto Energy Limited will be looking for a new partner or partners after successfully terminating its failed farm-out to fellow Australian company BHP Billiton Petroleum (Philippines) Corporation over Service Contract 55.

ing interest to Otto, taking Otto’s working interest in SC55 to 93.18%.

The key terms of a termination agreement between Otto and BHPB are: • Upon approval of the re-assignment by the DOE, Otto will accept the re-assignment of BHPB’s 60% working interest and BHPB will pay US$3.0m to Otto;

Otto also revealed that it will receive more than US$27.5 million from BHPB for being allowed to walk out of the SC55 farmout agreement.

• Otto to lodge a Sub-Phase 4 work program and budget with the DOE, to drill the Hawkeye-1 exploration well;

Otto is now seeking approval from the Philippines Department of Energy (DOE) for re-assignment of BHPB’s 60% work-

• BHPB will pay a further US$24.5m to Otto upon completion of drilling the first exploration well in SC55; and

46 Philippine Resources

• BHPB has no enduring rights to any future exploration outcomes or obligations.

Otto reported recently that it had briefed the DOE of the intention to undertake drilling of the 3D seismically defined and DHI (Direct Hydrocarbon Indicator) supported Hawkeye-1 exploration well in Sub-Phase 4.

Drilling at Hawkeye is being targeted for a possible Q4 2014 spud.

Otto Chief Executive Officer Gregor McNab said the termination of the farmout agreement with BHPB was a good result for the company’s shareholders, providing the company with material Continued on opposite page >

February 2014 - April 2014

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Energy News

Philippine Resources 47

Energy News

February 2014 - April 2014

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Shell to build multi-billion peso fuel import facility in Cagayan de Oro

I

n an effort to help the country secure a more sustainable energy future, Pilipinas Shell Petroleum Corporation is putting up a multi-billion peso fuel import facility in Cagayan de Oro that is expected to cater to the power and energy needs of millions of residents, motorists and other end-users and consumers in Visayas and Mindanao.

This development was bared by the Philippine Ports Authority, the owner and operator of the Cagayan de Oro port eyed as the vital site of the import facility project.

Centenary in the Philippines The recent announcement coincided with the commemoration of gas technology and smarter mobility proponent Shellâ&#x20AC;&#x2122;s centenary in the Philippines this year.

Dubbed the North Mindanao Import Facility (NMIF), the project is aligned with the policy thrust of the Department of Energy (DoE) to promote investment in the energy sector.

The project will contribute toward two of DoEâ&#x20AC;&#x2122;s directives under the Philippine Development Plan 2011-2016, which are: to promote development and upgrade of

the downstream infrastructure, and to update the Oil Supply Contingency Plan through the establishment of oil stockpile.

The NMIF provides an additional source point for fuels that can be distributed to depots in the Visayas and Mindanao.

Increased energy security The facility will contribute to increased security of energy supply as it will provide additional storage capacity of finished petroleum products.

At the same time, the facility will help reduce maritime risks as source of petroleum products is closer to the intended distribution points.

Shell, as a global leader in power, energy and gas technology, continuously works to meet the increasing energy demand and supply challenges of the world by delivering smarter products and cleaner energy, smarter infrastructure, promoting sustainable mobility, and by developing new energy sources such as cleanerburning natural gas, to address the energy challenge while mitigating environmental impact.

Nation-building In the Philippines, Shellâ&#x20AC;&#x2122;s fundamental orientation toward social development has contributed to nation-building, with numerous projects and programs attendant to its line of business in the communities and areas where it operates.

Viewing the scale model of the NMIF project are (from left): Cagayan de Oro Mayor Oscar Moreno and Shell companies in the Philippines Country Chairman Edgar Chua, NMIF Project Manager Leo Dejadina, Project Engineer Jennifer So, Facilities Manager- Philippines Mario Monsalud, Supply Chain Development Lead Bryan Nazareno, East S&D General Manager Dennis Gamab, JGC Phils President Shigeru Hanajima view the scale model of the North Mindanao Import Facility together with project team members and stakeholders.

48 Philippine Resources

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Dragon Oil likes Philippines’ oil and gas prospects

D

ubai headquartered Dragon Oil plc has taken an interest in the Philippines oil and gas sector after agreeing to farm into Nido Petroleum’s Service Contract 63 (SC 63) permit in the offshore NW Palawan Basin.

Dragon Oil, which has a market cap of 2.96 billion pounds, is a leading independent international oil and gas exploration, development and production company.

Its principal asset is the producing Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan, while it also has exploration assets in Tunisia, Iraq, Afghanistan and Egypt.

Under the terms of the agreement with Nido, the farm-in will be completed as a two-stage process, with Dragon Oil initially acquiring a 40% participating interest in SC 63 from Nido’s current 50% participating interest in the Service Contract. The Philippine National Oil Company - Exploration Corporation (PNOC-EC) will continue to have a 50% participating interest.

The second stage is subject to certain conditions being met and additional Philippine government approvals being received. In this stage, Nido will seek to secure an additional net 10% participating interest in SC 63 from PNOC-EC on the same terms agreed between Nido and Dragon Oil. Nido will then have a 20% working interest in SC 63. Dragon Oil has the option to acquire an additional 10% participating interest from PNOCEC on the same terms and conditions agreed between Nido and Dragon Oil. Under the terms of the farm-in agreement, Dragon Oil would reimburse Nido US$2.18 million in consideration of past seismic costs and pay 56% of the costs of drilling the Baragatan-1 well to earn a 40% participating interest level. The carry on the well cost is capped at US$25 million (100% basis); well costs over and above this level will be shared by the parties in proportion to their participating interest. Should the various conditions and approvals required for the second phase be satisfied, and Dragon Oil exercises its option, Dragon Oil would pay a pro-rata higher amount to earn a further 10% interest.

SC 63 covers an area of 10,560 km² and is currently in Sub-Phase 2b of the exploration programme, in which there is a commitment to drill one well. 754 km² of 3D seismic were shot in a previous exploration phase, leading to the identification of the Baragatan prospect as the drilling target for the commitment well.

This prospect lies in c. 50 metre water depth and is anticipated to be drilled to a depth of 3,390 metres. The primary reservoir objective for the Baragatan-1 exploration well is the sandstones of the Miocene Pagasa Formation.

During the Baragatan-1 drilling operations Nido will remain Technical Operator and Dragon Oil will second personnel to the drilling team and will be responsible for overall drilling management; PNOC-EC will continue to be Operator of the Service Contract. Following the drilling of the Baragatan-1 well, Dragon Oil will have the right to become Operator of the Service Contract.

Dragon Oil’s ceo, Dr Abdul Jaleel Al Khalifa, said the company had been searching for new projects in Soutb East Asia before selecting the Philippines.

“We have been looking into exploration opportunities in South-East Asia for a while and with this farm-in agreement, yet another asset is added to our portfolio. We have the financial resources, technical expertise and management talent to deliver on our diversification strategy as we continue the search for the rightfit exploration and development assets.”

Nido’s Managing Director, Phil Byrne, said it was good to have a company of the quality of Dragon Oil join it in SC 63.

“Dragon Oil brings a wealth of exploration, development and operating experience to the SC 63 Joint Venture through their expanding portfolio, in particular through their world class Turkmenistan producing asset.”

50 Philippine Resources

Company News

February 2014 - April 2014

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A Sustainable, Innovative Partnership

S

ustainability and operational excellence form the cornerstones of Carmen Copper’s mining enterprise. It is currently working towards achieving higher cost efficiency and being in the lowest quartile of mining companies worldwide in terms of production costs.

Carmen Copper resumed the operation of Atlas Mining’s Toledo copper mine by facilitating its rehabilitation in 2007. Atlas Mining’s operation of the Toledo copper mine, which is located in the province of Cebu in the Philippines, began in 1955, but was suspended in 1994 on acccount of flooding and the decline in the world market price of copper.

Outotec, renowned for innovative solutions and technology, was engaged on an EPS basis (Engineering, Procurement and Services).

Alongside full engineering expertise, including high level concentrator process capabilities, Outotec’s proprietary minerals processing equipment would also be a key component in delivering the targeted expansion of Carmen Copper’s processing capacity.

The delivery schedule was extremely ambitious, with Carmen Copper and Outotec working in close partnership toward completion.

Innovative Engineering

Scope In 2012, Carmen Copper engaged Outotec as its principal technology partner for the upgrade and modernization of its processing plant.

Upon completion of the first phase of the upgrade project, daily throughput is expected to increase from 40,000 tonnes per day to to 60,000 tonnes per day.

Upgrade at Carmen Copper site.

52 Philippine Resources

Outotec’s cost-effective engineering approach engaged a multi-disciplinary team of technical personnel for civil, structural and mechanical works, engineering design, instrumentation and process engineering.

The team worked well with the Filipino engineers of Carmen Copper to meet demanding schedules.

The upgrade was engineered for both greenfield and brownfield stages to allow continuous plant operation. Allowances were also incorporated for future expansion and sustainable, value-adding by-product recovery.

Point Cloud 3D laser scanning was employed to provide a complete and accurate survey of the vast site.

This technology, from a detailed engineering perspective, not only delivered the fastest and safest means of surveying this complex brownfield plant, but is also the most accurate in the world, providing a complete up-to-date picture of site.

The extremely precise 3D scanned data considerably reduced time associated with processing data and images in more ‘traditional’ ways.

Partnership Approach The close partnership between Carmen Copper and Outotec ensured meticulous planning and enabled site to be fully Continued on page 54>

Company News

February 2014 - April 2014

www.philippine-resources.com

<Continued from page 52

mized recovery. ‘

operational at all times. Tie-in points for new equipment and rerouting of pipework, for example, were planned upfront and all disruptive work was completed during shutdowns, ensuring no interruption to production.

Commissioning of the upgrade commenced in the fourth quarter of 2013 and progress at Carmen Copper has been ongoing since completion of this case study in November 2013.

Project Scope: •

EPS (Engineering with collaborative Procurement and Services).

•

Proprietary equipment supply

Future Development Procurement was also carried out on a collaborative basis with Carmen Copper to deliver the most cost effective and timely result.

State-Of-The-Art Concentrator Technology Designed to cope with projected increases in throughput and recovery, Outotec’s new concentrator technologies at site comprise comminution, flotation, thickening, analyzer and DCS systems.

Considerably more operator friendly, the upgraded circuit offers easier and safer access. The new system delivers advanced analysis and automation for up-to-the-minute process stability, providing maximum availability and opti-

Details-EPS: The Carmen Copper expansion project has afforded Outotec a unique opportunity to work closely on a significant brownfield concentrator expansion project. This project required very close onsite liaison with the client, who has been responsible for construction.

Through collaboration, Filipino subcontractors and partners were utilized for detailed engineering and the Carmen Copper project as a whole has facilitated development of concentrator engineering, procurement and project management. With forward planning, Carmen Copper has the flexibility to undertake further expansions in the future.

Carmen Copper Corporation (“Carmen Copper”), a wholly-owned subsidiary of Atlas Consolidated Mining and Development Corporation (“Atlas Mining”), practices sustainable and responsible mining by adhering to the highest standards in health, safety and environmental performance in its operations and by leading the industry in community contributions and relations.

54 Philippine Resources

•

Engineering study

•

Process engineering

•

Detailed civil, structural, mechanical and electrical engineering

•

Procurement scope.

•

Mill, civils and site installation advisory services

•

On site engineering support services (mechanical, structural, civil & electrical)

-

collaborative

Details-equipment: •

2 x 6MW ball mills and trommels.

•

Complete float circuit (roughers and high-grade cleaners) including 4 x 300m3, 10 x 16m3 cells and blowers

•

New 39m tailings thickener (tank, bridge, feed, mechanism)

•

Retrofit upgrade to 2 x 24m concentrate thickeners

•

Courier analyzer, PSI and metallurgical sampling system

•

DCS System

Company News

February 2014 - April 2014

www.philippine-resources.com

Surtech teams up with Logistics Marketing

J

akarta­based airborne mapping and land survey specialist Surtech International Limited has teamed up with Logistics Marketing Philippines to supply specialist services to the local minerals, energy and resources sector.

Surtech International Limited has successfully undertaken 10 airborne LiDAR surveys for mining and geothermal projects, together with the 3D Laser scanning of a Cement Plant since the Company started its operations in the Philippines in 2011.

Surtech specializes in the use of high technology in surveys, for instance in the fields of 3D laser scanning and LiDAR. The company is a leader in the field in Australia, India, Indonesia, Oman, Singapore, Saudi Arabia and the United Arab Emirates.

“We’re dedicated to reducing the risk inherent in all projects by tailoring services to focus on specific client need. Our aim is always to meet or exceed client expectations,” explained Greg Neubecker.

Between them, Neubecker and Walsh have over 50 years’ experience in managing survey projects in different business sectors and locations throughout the world. The pair say they are “hands on” overseeing a team of skilled professionals.

They are also “fully aware we have an obligation to ensure our activities have minimal impact on the environment and that we are sensitive to the many different cultural environments in which we operate,” Neubecker said.

In addition to the standard land surveying services, Surtech is particularly proud of its 3D laser scanning and air­borne laser scanning capabilities.

3D laser scanning and modeling is designed for companies which require solu56 Philippine Resources

tions for the accurate capture and documentation of existing facilities.

Using high speed/resolution 3D laser scanners together with specialized processing software, Surtech can measure complex facilities or structures in high detail and can deliver 3D digital point clouds or solid CAD model data sets.

With a measuring rate of up to 500,000 points per second, the laser scanners rapidly provide an accurate three-dimensional representation of the scanned surface with high density measurements taken over the visible surfaces of the target structures.

Individual laser scans taken from different positions can be consolidated to generate dimensionally accurate digital models of a complete plant, building or any solid object.

Depending on the methods used and the work processes employed in the field, overall accuracy can be within five millimeters.

Applications of 3D laser scanning include refineries, offshore platforms, power stations, brownfield upgrades or revamps, as-built of existing facilities, industrial design and reverse engineering, fabrication construction and verification, plant visualization and 3D model and 2D drawing extraction.

Benefits The benefits of 3D laser scanning include reduced site visits, rework and design times; elimination of hot-work and rework, the risk and costs associated with hot-work, construction rework, and greatly reduced field fit-up welds; elimination of the safety hazards of traditional field data capture and up-to-date facility documentation to facilitate maintenance; and reduced project risk by enabling decisions based on having the best available

current information.

Airborne laser scanning, commonly referred to as LiDAR, is technology for collecting large areas of elevation data.

Surtech’s advanced LiDAR system allows the collection of millions of points over a survey area without the need for extensive ground access.

The aircraft-mounted system collects up to 5,000 hectares per day, independent of the type of terrain or vegetation.

The collected data is post processed using the TerraSolid processing suite of software to produce digital terrain models and digital orthophotos.

LiDAR is an active, optical remote sensing technology used to create digital models of planet Earth’s surface to an Engineering degree of accuracy. It is a highly effective survey method for remote locations, large scale areas and densely vegetated project sites.

It pro­ vides terrain detail inaccessible through conventional surveying methods such as photogrammetry and ground survey.

Airborne laser scanning is achieved by measuring the time delay between the transmission of a laser pulse and the return reflection signal from the object scanned. The position of the aircraft is referenced by using integrated GPS - INS technology.

The equipment will detect multiple returns from each emitted pulse allowing it to record the top of vegetation canopy as well as the ground surface below the vegetation.

During post processing Surtech can remove all laser strikes returned from vegetation and to retain points from the true ground surface. This true ground data is then used to produce digital terrain.

Company News

February 2014 - April 2014

www.philippine-resources.com

Torrent 400 now in the Philippines

M

ore than ever, mining companies are being pressured to be kinder to the environment, but operations and equipment managers are often at a loss as to what “green” products they can use that would appease both environmentalists and the corporate bottom line.

NCH Philippines, however, may have just the solution, especially for firms that use a lot of expensive equipment that need frequent cleaning.

The company launched the Torrent 400 parts cleaning system to the mining industry last November during the National Mine Safety and Environment Conference in Baguio City, touting a machine that relies on water, pressure, heat, and a special cleaning solution to get the job done.

The Torrent has been in use in Europe and Australia for some time but has just

been introduced to the Philippine market, NCH Philippines country manager Rod Arellano told Philippine Resources.

The company previously introduced the machine to the local automotive industry, but Arellano thinks mining companies will be able to make better use of it.

Thanks to the Torrent’s patented system, workers who used to degrease expensive machine parts with kerosene, diesel, gasoline or other harmful chemicals don’t have to get their hands – or the environment -- dirty, Arellano said.

The self-contained system has built-in gloves that the user can use to wash parts up to one square meter large in as fast as one minute. The Torrent also recycles the cleaning solution that it uses withn the machine, which only needs to be plugged into any 220-volt outlet to work, added NCH Philippines marketing manager Vanessa Tan.

With the Torrent, “you are not disposing any used chemicals or solutions down the drain” nor will companies expose themselves to fire hazards by using flammable liquids, Arellano said. “The solution is waterbased and is emitted at 60 psi of pressure, leading to increased efficiency.

Thus it is environment friendly, and we provide worry-free service.”

How worry-free? Companies only need to lease the Torrent from NCH for about Php15,000 a month and use it as much as they want. NCH takes care of all repairs and tops up all consumables of the Torrent, and if the machine breaks down for some reason the company replaces it with a new one, all free of charge.

“Our technician comes and visits the equipment every 15 days, or as frequent as needed, and we clean the machine, we change the parts that are supposed to be Continued on following page>

{ design + print }

Philippine Resources 57

Company News

February 2014 - April 2014

www.philippine-resources.com

Metso introduces innovative Megaline mill lining

M

ill lining is a vital part of your grinding operations and can have a major impact on the performance of your circuit. Mill availability and worker safety are primary issues faced all over the world. Metso’s Megaliner is an offering that lets you save time and money, and to top it improve worker safety.

handled by the same 7- to 8-axis liner handlers.

•

The innovative attachment system, patented by Metso, enables a quick and easy installation and removal of liners as well as provides for a safer and less stressful environment for installation teams.

Main benefits

Application Based on many years of experience and know- how Metso has pioneered a new mill lining concept, the Megaline, which substantially improves the mill availability and worker safety during mill liner maintenance activities.

As grinding mills are increasing in size, the cost of lost production due to downtime is becoming more and more important. In order to reduce downtime, liners are growing both in size and mass to minimize the number of components to be installed.

Megaline shell liner components are substantially larger than conventional metallic liners, yet still light enough to be

The Megaliner is suitable in large AG and ball mills with large trunnions and where modern liner handlers are available.

Features: •

Each liner covers up to 4 m²

•

Light weight in relation to size

•

Each Megaliner element integrates multiple lifter and shell plate rows

•

Minimum number of attachment points

•

Bolts inserted and removed from the outside of the mill

Guiding markets facilitate easy positioning and alignment.

Mill availability is increased due to quick liner replacement. A minimized number of liners and attachment points per liner promote significantly faster installation and change out time, as compared to conventional liners.

Metso’s unique attachment system makes it easier to install and remove the liners. Old liners can be stripped out and new liners installed by the operator of the liner handler acting alone.

The attachment system makes the shell liner easy and fast to remove and replace at a much higher level of safety. Liner bolts are inserted and removed from the outside of the mill and therefore no need for any member of the installation team to be in the drop-zone of the liners while inserting or removing liner bolts.

<Continued from previous page changed, and we also top up the cleaning solution, all of this for no charge,” Arellano said.

He also said NCH would even stop billing a customer for a defective Torrent “until it’s back to normal, just like paying for electricity: you only pay for what you use.”

The Torrent drew strong interest for NCH’s exhibit at the Mine Safety Expo last November, and Arellano said mining companies like Filminera, OceanaGold and FCF have inquired on leasing units. Rapu-Rapu was also using four Torrent machines before it closed its mining operations, he added.

“We know mining needs this, and since we are a green company that wants to protect the environment, we want to provide green products for the mining companies,” Arellano said.

58 Philippine Resources

LOGISTICS, CONSULTANCY AND REPRESENTATIVE SERVICES

LOGISTICS AND MARKETING PHILS., INC. (LOMAR) has been providing quality management and consultancy services in the Phillipines for 35 years.

LOMAR is focused on energy and resource related activities particularly in oil and mining exploration industries, offering a range of services including consultancy, logistics and representative services.

As the demand for maintenance services increases, LOMAR also provides specialized industrial and mechanical services to the oil, gas and petroleum refineries, chemical, mining and cement utilities.

AMC DRILLING FLUIDS

LOMAR SERVICES

LOMAR are proud to be representatives for AMC’s Oil and Gas Division in the Philippines, supplying AMC Drilling Fluids and products to Oil and Gas operations in the area.

LOMAR provides the following services:

AMC is an Australian drilling fluids company specializing in the production of high quality drilling fluids and equipment for the Oil and Gas market. The company has a focus on innovative product development and has an in-house research, development and testing facility, managed by qualified industrial chemists with specialist training in drilling fluid development.

AMC’s drilling fluid products are designed to give customers optimum results in diverse and challenging conditions.

• • • • • • • • •

Business development services and support Representative services Logistic services Project management and coordination services Purchasing and procurement services Transport hire, including car, plane, helicopter and vessel hire Equipment import and re-export services Remote site camp installation and management services Specialist maintenance services (Oil, Gas, Petrochemical, Power and Heavy Industries)

CONTACT DETAILS Logistics / Marketing Philippines, Inc. 3F 111 Paseo de Roxas Building Paseo de Roxas cor Legaspi St. Legaspi Village Makati City 1296 Philippines PO Box 1296 MCC 3117 Tel: + 63 2 815 8836 / + 63 2 815 8839 Fax: + 63 2 817 9978 Email: lomar@lomar.com.ph

www.lomar.com.ph

|

www.lomarsupply.com

|

www.amcoilandgas.com

Company News

February 2014 - April 2014

www.philippine-resources.com

E+S brings global strength to Philippines

T

he shoring systems from Emunds + Staudinger / KRINGS, a division of ThyssenKrupp Bauservice GmbH, have been providing safety to countless civil engineering projects at home and abroad for over 60 years.

Comprehensive service, a high standard of consultancy, solution-oriented project supervision and efficiently organized after-sales service provide successful project. Centre- and end-supported trench boxes, sliding rail systems, piling frame elements and special shoring systems are all available.

Advanced equipment, such as site road systems, pipe grabs or pipe puller represent useful additions to the product range. Especially the wide range of trench boxes offers the right solution for any construction and trench shoring project in inner-city areas.

The use of shoring systems tailored to the requirements of the particular project yields safe and cost-effective solutions. Emunds + Staudinger and KRINGS. Trench shoring systems, Site road system and special products for civil and underground engineering applications.

Your top-partner for rental, hire, sale, consulting and service.

E+S Linear Shoring With Linear shoring the soil outside the trench remains untouched â&#x20AC;&#x201C; no adverse effects on buildings and traffic flow. Instead of permanently positioned hinged spreaders, the non-bending roller units of the linear shoring system hold the supports and thus keep the shoring panels in the trench apart.This way, the trench width remains completely uniform throughout all stages of the project. With the optional E+S U boogie car, even larger vertical pipe clearances can be achieved.

huge step forward in many inner-city applications.

Linear shoring yields extremely good soil compaction values during extraction. The overall efficiency of the system particularly in deep trenches is enhanced even further by the fact that the forces released during extraction are considerably lower than on most other shoring systems. And that is an assurance of a high overall pipe-laying rate.

The first overlapping innercity slide-rail shoring. Progress through innovation.

As one of the worldâ&#x20AC;&#x2122;s leading specialists in high-performance steel-shoring systems, E+S has addressed itself to the problem of high-depth inner-city shoring.

The solution, overlapping inner-city linear shoring, is another milestone in an impressive series of innovative system developments from E+S. Depths up to 7 m in centre of towns.

Vertically mobile, adjustable.

Site road system.

Parallel shoring and Linear shoring system complete the program, especially the latter one has been developed for the shoring of trenches, pits and excavations of particular width and depth, providing an economical alternative to pile wall or sheet piling.

Emunds + Staudinger / KRINGS has further developed the existing product range to meet practical needs and launched new, innovative shoring systems and one-off solutions for special construction tasks.

60 Philippine Resources

horizontally

The boogie cars mounted in the supports of the shoring system can be adjusted in height to match the increasing depth of the trench. The width of the roller frame is adapted by the spreader system to the desired trench width. Linear shoring is suitable for cast-in-place concrete and can thus be flexibly used in all construction projects.

Tall panels can now be fitted in spite of overhead cables.

With other systems the panels have to be inserted in a complicated procedure from above. For the first time ever it is now possible to swing shoring panels into position from the sides. Because the shoring panels are swung at ground level from the side into the supports and not lowered from a great height, overhead cables such as tram contact lines are no longer an obstacle. This represents a

This E+S innovation makes inroads into a new performance dimension. For the first time, inner-city trench shoring with numerous transversing pipelines is possible up to a depth of 7 m without any vibration or impact force. The surrounding ground remains unaffected.

Shoring is installed and removed entirely without vibration. No impairment of immediately adjacent buildings and of traffic facilities.

Underground overlap In terms of function, overlapping innercity linear shoring is comparable to modern overlapping large-area shoring. The short piles are guided in overlapping pile frames. The pile frames are held in special supports that are already in successful use in E+S linear shoring. The result is two overlapping walls of piling that can be pulled independently of one another.

Company News

February 2014 - April 2014

www.philippine-resources.com

Coffral brings value engineering to light By: Maria Paula Tolentino

V

alue Engineering is a function oriented, systematic approach and study that aims to provide value in a product, system or service.

Often this improvement is focused on cost reduction; however other important areas such as safety, customer perceived quality and performance are also important.

This is what Coffral Access and Shoring is all about.

On February 12, 2014 the Coffral team ,in partnership with Emunds + Staudinger and Kringsverbau Trench Shoring Systems, held a discussion at EDSA ShangriLa Plaza Hotel.

The event was spearheaded by Coffral CEO Jim Goudsmit together with Philippine Water Works Association, Inc. (PWWA) President Edgar Lopez, and the intimate affair focused on the products of Emunds + Staudinger and Kringsverbau Trench Shoring Systems.

The discussion was led by ThyssenKrupp Bauservice GmbH Export Sales Manager, Sven Rademaechers, who explained the technicalities and services related to the compact shoring and slide rail shoring systems.

Sole distributor Said systems are offered for sale and rental through Coffral Access and Shoring Inc. as the sole distributor for the Philippines, while the engineers of the ThyssenKrupp Bauservice GmbH are providing a state-of-the art engineering service based on over 60 years of experience.

Philippine Resources had the opportunity to sit down with Rademaechers and discuss more on ThyssenKrupp’s innovative product:

62 Philippine Resources

How can your product best benefit companies?

For one, the product is more economical and faster.

It increases the amount of work done while increasing profit for the construction company, eventually accomplishing more for the project.

Where can the product be best utilized?

The product can be used in areas where excavation is involved and this includes not only urban areas but rural areas as well.

How is this product economical?

The classic trench shoring using sheet piles is costly due to several factors, one of which is time. .

Using the compact and slide rail trench shoring systems instead speeds up the excavation and trench shoring process enormously.

Thus it is more economical, not only for the contractor, but for the project owner as well as projects can be accomplished faster.

In Metro Manila or other densly populated areas with chronic traffic problems, this can be a most decisive points of the economic evaluation when introducing these technologies.

In terms of manpower, what is the difference between the old (sheet piles)and new system?

With the new system , the need for manpower and use of speciality equipment is reduced drastically.

It only takes an excavator, with a skilled operator assisted by two to three workers f for the entire process of excavation and shoring of the trench.

A box of over 4 meters length and depth can be sunk in less than one hour.

“Value engineering” was mentioned earlier. What does this mean for this particular product?

Value engineering means accuracy and high performance, but SAFETY too. Unfortunately, worldwide, accidents are still happening, and people are still dying in trenches.

A human life has no price tag. The product, aside from being economical and time efficient, if offers safety for workers.

Value Engineering can achieve impressive performance and savings, but more than that, maximizing time and putting a premium on the safety and care of human life is what Coffral and Emunds + Staudinger and Kringsverbau are all about.

Company News

February 2014 - April 2014

www.philippine-resources.com

Natural Gas Summit attracts quality speakers

P

hilippine Resources is pleased to be associated with the Natural Gas Summit 2014 which is being held at the New World Hotel in Makati on March 12 and 13.

The summit is being organized by Leverage International (Consultants) in coordination with the Phiippinr Department of Energy.

Opening statements will be delivered by ambassadors of major country players in the global natural gas market including Norway, Russian Federation, Netherlands, Japan and Spain. The first session on the Genesis of Natural Gas in the Philippines will have the following speakers and moderator: former Energy Secretary

Francisco Viray now CEO of Trans-Asia Oil and Energy Development Corp., former Energy Vincent Perez now Chairman of Merritt Partners, former Energy Secretary Raphael Lotilla and Energy Undersecretary Jose Victor Emmanuel de Dios now CEO of GE Philippines. To discuss the Challenges and Risks in Natural Gas Business are: Country Chairman of the Shell Companies in the Philippines Edgar O. Chua and former Energy Undersecretary Rufino Bomasang now Chairman of Otto Energy Philippines and Philcarbon, Inc. With former Energy Undersecretary Jose M. Layug as Moderator, global and regional outlook and perspectives for LNG will be presented by Philippine National Oil Company President Antonio Cailao,

the Secretary-in-charge of the ASEAN Council on Petroleum (ASCOPE) Victorino S. Bala and Dr. Yanfei Li, Energy Economist in the Economic Research Institute for ASEAN and East Asia (ERIA).

A session on the Legal Framework for a Natural Gas Business will be conducted by legal experts from the international law firm Latham & Watkins and local law firm Puno & Puno.

The session on Building LNG and Natural Gas Infrastructure will be chaired by Zenaida Monsada, Director of the Oil Industry Management Bureau of the DOE. Speakers include Hiroyuki Matsuda from JICA and Sarah Fairhurst, Partner of the Lantau Group (HK) Ltd.

Big turnout expected for 2014 Asean Corporate Sustainability Summit

M

ore than 200 delegates are expected to turn out for the ASEAN Corporate Sustainability Summit & Awards 2014 in Manila in March.

The highly regarded event includes a pre-conference workshop on March 19 and the Summit on March 20 & 21. Philippine Resources is proud to be a Media Partner for this year’s event.

Invited speakers include Bindu Lohani Vice-President for Knowledge Management and Sustainable Development, Asian Development Bank (ADB) Philippines, Kama Neson Ganeson Director for Quality Impact & Delivery Excellence, Asia Society for Social Improvement & Sustainable Transformation (ASSIST), Inc. Philippines, Stefan Phang, Regional Director, Sustainability Sealed Air, Singapore, Sec. Arseno Balisacan Director-General, National Economic and Development Authority, Philippines, Dr. Corazon Claudia, Committee Chair Climate Change and Sustainable Development Management Association of the Philippines, Vijay Sharma General Manager, Rural Business GlaxoSmithKline Consumer Healthcare, India, Bhavani Prakash, Founder, Eco WALK the Talk and Green Collar Asia, Singapore, Ralph Dixon, CEO YTL - SV Carbon, Malaysia.

The 2013 version of the ASEAN Corporate Sustainability Summit 2013 was a tremendous successf In its inaugural year, the event was attended by 200 experienced practitioners and industry experts, spanning from diverse organizations within the Philippines and across the region.

With the strong support from our 44 key speakers, 24 partners and 11 sponsors we were able to successfully hold the first ASEAN Corporate Sustainability Summit. The main focus of the agenda was to come up with a perfect program designed for the region’s sustainability chal lenges – to understand the need for them to attend, to extract detailed information of their interests and to invite international speakers that are relevant to the audience. And successfully, the commitment paid off.

The event drew an impressive list of various senior attendees.

Not only does this reflect the substantial relevance of the conference but it also vividly demonstrates the support that the event receives from the community of sustainability practitioners and policymakers. Overall satisfaction with the event was very good.

In particular, delegates, sponsors and partners gave the event positive feedback on the commercial viability of the event..

Philippine Resources 63

Philippine Resources part of the community

PROTECT in 9th year

Advertisers’ Index 49

Aden 45 Antrak Philippines

35

Asian LPG Gas Summit

53

Austhai Geophysical

29

Brunel

46 & 47

Coffral

21 & 33

Deepcore Drilling

23

Geothermal Conference

37

GXD 2 Hansa Meyer Indonesian Resources

7 39

IPSI (Intercept Preservation Systems Inc.)

11

JCL International

13

Indodrill IBC King-king Copper Gold

31

Lomar 59 Lycopodium 9 LP Gas Summit McConnell Dowell

53 OBC

Metso 3 Natural Gas Summit

55

NCH Philippines

25

NuPrint Graphics

57

Orion Project Services

5

Outotec 15 Pacific Strategies

19

Philippine Mining Luncheon

51

Protect 61 QED IFC RDCL 27 SGS Philippines

1

SMEC 17 Surtech 41 64 Philippine Resources

P

hilippine Resources has again tied up with Leverage International (Consultants) Inc. as a Media Partner for the PROTECT 2014 International Conference and Exhibition on April 2-3 at the New World Hotel in Makati City.

2nd Annual ASEAN Corporate Sustainability Summit

February 2014 - April 2014

www.philippine-resources.com

Now on its ninth year, the PROTECT conference is the largest and longest-running security and safety conference and exhibit in the Philippines, and is recognized as a serious forum for areas of concern on security matters for both government and the private sector.

First launched in 2005 in cooperation with the Anti-Terrorism Council, PROTECT’s theme for 2014 is “Doing Business Amidst New Threats.” It brings together about 200 local and international industry experts who will focus on security issues in the cyber world, natural disasters, public and personal safety, the latest threats to industry and commerce, global corruption, and terrorism.

The two-day event will have Maria Ressa, CEO and Executive Editor of Rappler.com, as facilitator for the guest panels on the various subjects during the conference and expo.

At PROTECT 2014 there will be strong focus on the cyber world, natural disasters, public and personal safety, the latest threats to industry and commerce, global corruption and terrorism.

Indodrill Group of Companies provides specialised contract drilling services to the mining, mineral exploration, coal mining and construction industries in the South East Asia / Pacific regions.

Our operations commenced in Indonesia in 1995 and we have steadily expanded into other Asian countries, Australia and Europe, focusing on mining and exploration operations that demand high international standards throughout.

All operations are conducted without compromise to the highest standards of safety and environmental protection that can be achieved.

INDODRILL (EMEA) LTD EUROPE MIDDLE EAST AFRICA OFFICE IN SCOTLAND

â&#x20AC;&#x153;Our management and staff are committed to improving the standards of performance in the drilling industries in which we operate in South East Asia, Australia and Europeâ&#x20AC;?

INDODRILL PHILIPPINES INC

Berthaphil Building 1 & 2, Berthaphil II South, Bayanihan Street Clark Freeport Zone, Pampanga 2023, Philippines Tel: +63(45) 499 1159 Email: info@indodrill.com