Philippine Resources Issue4 2013, November-January

Philippine Resources

Mining, Petroleum & Energy Journal Issue 4 2013, November - January

Red Mountain On The Fast Track

Stuck In A Zero Sum Game

Drilling Success at Galoc Phase 2

Miners Helping Out in Bohol

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November 2013 - January 2014

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Headlines in this issue

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30

Resources Commentary

34

8 “Ronnie� Penarroyo looks at the Indigenous Peoples Rights Act of 1997 16 Patricia A. O. Bunye examines the history of the PMSEA 20 Is the mining industry stuck in a zero sum game?

Economic Commentary

24 ADB says Philippines economy surging but job creation lagging 26 Developing East Asia slows, while Philippines grows

4 Philippine Resources

Community Resources

30

Mining companies lend hand for Bohol victms

34

Mining firms help educate in Mindanao

Energy News

42

Galoc II ready to bring new oil riches

Mining News

44

Red Mountain making big strides at Batangas.

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Philippine Resources Mining, Petroleum & Energy Journal

November 2013 - January 2014 Philippine Resources Journal is published independently for executives in Philippine mining, petroleum and 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 Paula Tolentino Kevin Lewis 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 IPrint.

Digital online edition www.Philippine-Resources.com

6 Philippine Resources

Resourceful juniors making big strides in Philippines

T

riches.

hanks to the resourcefulness of a number of junior mining and oil and gas companies the Philippines can look forward to continuing returns from its natural

Despite global difficuties for the equity and commodity markets the small fish continuing to find ways to make the best of their circumstances to ensure that the Philippines has a chance to continue to grow.

Companies like Otto Energy, Nido Petroleum, Gas2Grid and Red Mountain are continuing to use tight budgets to develop their various projects. Some of them may not pay off for some time to come, but in the case of Otto and Nido’s Galoc II offshore oil development, the two companies’ shareholders and the people of the Philippines are about to receive a significant reward for their willingness to take a chance where others may not.

At the other end of the scale we must applaud BHP Billiton, one of the world’s biggest companies, for not giving up on the Philippines and let us hope that its plans to drill the Cinco-1 exploration well off the Palawan coast will gain a final go-ahead soon.

Resources for Community Once again the resource sector has shown its big heart, with teams of mining industry specialists racing to Bohol to help out after the terrible recent earthquake and the following aftershocks.

Despite the personal risk, the mining industry representatives went into some of the worst hit areas to provide rescue assistance and bring vital medicines and equipment to the hard hit people of Bohol.

We salute you all

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

By Fernando Penarroyo

R

esource and infrastructure developments are often concomitantly related to indigenous peoples (“IP”) rights issues.

IP rights are closely associated with human rights with environmental and ethical business practices considerations.

Among the project due diligence and risk assessments a resource and infrastructure developer must perform is the determination of the presence of IPs, who usually claim and occupy areas of critical environmental significance, cultural heritage or high biodiversity.

From the perspective of IPs, free and prior informed consent (“FPIC”) to development projects is regarded as a means for operationalizing the right to selfdetermination, respect for IPs decisionmaking processes and the associated right to accept or reject projects that will affect them.

To IPs the right to FPIC is rooted in the exercise of customary law. However, recognition of IPs’ right to veto proposed developments brings concerns that such rights, perceived rightfully or wrongly, poses an obstacle to national development.

In the Philippines, not only mineral development but also energy projects like power transmission, petroleum, geothermal, hydro and even wind farms are being affected.

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

The question that comes to a developer’s mind is whether Republic Act No. 8371, Continued on page 10 >

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< Continued from page 8 also known as the Indigenous Peoples Rights Act 1997 (“IPRA”) gives IPs the right to veto projects defined by governments as those in pursuit of “national interest”.

Defining Consent: The Right to Say Yes or No Consent occurs when IPs give assent or approval to a development activity. As IP rights advocates note, the principle of free consent can only meaningfully exist when groups also have the ability to say “no” to a project [Viviane Weitzner, “Consultation Versus Consent: Going Beyond Reframing,” (2005)].

However, the principle of consent is among the most controversial in the debate over the nature and extent of IP rights. IP rights advocates justify IPs’ right to veto national development plans on human rights grounds citing the 1993 Vienna World Conference on Human Rights and Article 9 of the 1986 UN Declaration on the Right to Development which states that: “while development facilitates the enjoyment of all human rights, the lack of development may not be invoked to justify the abridgement of internationally recognized human rights.

The human right to development also implies the full realization of the right of peoples to self-determination, which includes, subject to the relevant provisions of both International Covenants on Human Rights, the exercise of their inalienable right to full sovereignty over all their natural wealth and resources.”

To IPs, the right to give or withhold their consent includes the right to determine the type of process of consultation and decision-making that is appropriate for them. IPs also view FPIC as embodying this right to say no without having to engage in a prolonged consultation or negotiation process.

Resources companies are thus confounded with the burden of understanding how to engage with indigenous communities in order to seek their consent in accord10 Philippine Resources

ance with the communities’ laws and procedures.

Further complicating the issue is whether the role of the State is relegated merely to act as a facilitator in the FPIC process, not by creating new bodies from which to obtain FPIC, but by respecting the indigenous authorities that already exist.

[Cathal Doyle and Jill Cariño, “Making Free Prior & Informed Consent a Reality: Indigenous Peoples and the Extractive Sector” (May 2013)] In Saramaka People v. Suriname (2008), the Inter-American Court held that where private sector developers have proposals for the development of IPs’ lands, recognition of the right to FPIC does mean that IPs have the right to say ‘yes’ or ‘no’ to such proposals.

The Court held that where there is ‘compelling public interest’, the State may seek access to and use indigenous territories and the resources therein but the State cannot simply invoke the public interest, it must also satisfy a number of additional requirements: (1) any acquisition of lands or use of those lands to exploit resources must be sanctioned by previously established law and in accordance with due process standards; (2) the State must show that the intervention is ‘necessary’ and has been designed to be the least restrictive from a human rights perspective; (3) the State must likewise show that means employed are closely tailored to the goal and that the cost to, or impact on, the affected people is ‘proportional’ to the benefit being sought; and (4) the proposed intervention should not “endanger their very survival as a people”.

While resource developers understand that FPIC is being promoted to give IPs more leverage in their negotiations with companies, government and private industry engaging in projects of national

interest often find it difficult to accept that communities have the right to withhold consent.

Consent is perceived by governments and the private industry to be incongruent with national sovereignty, as developers who usually obtain their license to operate from governments have expressed grave apprehensions that indigenous communities have a right to veto their projects.

This is further complicated when a government has already given a license to the company for the activity. [Amy K. Lehr and Gare A. Smith, “Implementing a Corporate Free, Prior, and Informed Consent Policy: Benefits and Challenges”] World Bank and Resources Industry Response to FPIC Two review processes on FPIC undertaken by the World Commission on Dams (2000) that addressed the social aspects of dam-building, and the Extractive Industries Review (2004) gave recommendations that the World Bank Group (“WBG”) rejected.

The WBG Management Response rejected the recommendations on the grounds that “governments and industry do not support free prior informed consent, where this would represent a veto on development” and that “[d]iscussions with communities need to take place in the context of local law which may or may not give rights [of] prior informed consent…”.

The World Bank’s Board of Executive Directors instead decided to adopt the lower standard of ‘free, prior, and informed consultation resulting in broad community support’ in its operational policy 4.10 on IPs that was approved in 2005: “Reflecting Board discussions on the Extractive Industries Review (EIR) on August 3, 2004 and the Management Response to the EIR, the revised policy Continued on page 12 >

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< Continued from page 10 affords project-affected Indigenous Peoples a stronger voice through a process of free, prior and informed consultation.

The Bank will provide project financing only where free, prior and informed consultation results in broad community support. “ The revised policy also gives greater weight to the self-identification criterion but does not call for it as a principal criterion because it is difficult to apply in practice.

In projects where activities are contingent on establishing legally recognized rights to IPs’ lands and territories, the policy requires the borrower to set forth an action plan for the recognition of such rights.

The policy does not prohibit physical relocation but requires the borrower to explore alternative project designs to avoid physical relocation, and when not feasible, to seek broad support of the affected communities as part of the free, prior and informed consultation process.

As expected, this statement did not fully meet the expectations of some umbrella IP organizations as well as human rights advocacy groups. [“Implementation of the World Bank’s Indigenous Peoples Policy”, (August 2011)] The World Bank’s standard, of ‘free, prior, and informed consultation resulting in broad community support’ set the parameters for the International Finance Corporation’s (“IFC”) position on FPIC (2006).

However, while IFC policy towards indigenous similarly requires ‘free, prior and informed consultations’, these are not required to lead to ‘broad community support’ but are interpreted as requiring ‘good faith negotiation with and informed participation of indigenous peoples’.

In the case of projects that may affect IPs’ lands, IFC clients are required to document IPs’ ‘informed participation and the successful outcome of the negotiation’.

12 Philippine Resources

Understandably, the International Council on Mining and Metals’ (“ICMM”) has been reluctant to openly commit to FPIC. Its “Position Statement on Mining and Indigenous Peoples” commits member companies to consult “with indigenous peoples in a fair, timely and culturally appropriate way throughout the project cycle...based on honest and open provision of information” in an accessible form, as well as to seek “broad community support for new projects or activities.”

The statement also recognizes that “following consultation with local people and relevant authorities, a decision may sometimes be made not to proceed with developments or exploration even if this is legally permitted.”

However, according to the ICMM, “a blanket endorsement of the right to FPIC is not currently possible, particularly given the difficulties entailed in applying the concept in practice.” [International Council on Mining and Metals (2010) “Good Practice Guide Indigenous Peoples and Mining,” cited in Irene Sosa, “License to Operate: Indigenous Relations and Free Prior and Informed Consent in the Mining Industry” (October 2011)] IPRA Constitutional Challenge In the Philippines, IPRA recognizes the right of IPs to ‘self governance’ (s 13) and the principle of self-delineation in the identification and delineation of ancestral lands (s 51).

However, the most ambiguous provisions of the law pertain to the rights of ownership over natural resources found in ancestral domains vis-a-vis the Regalian Doctrine.

In less than a year IPRA was passed, a constitutional challenge was lodged with the Supreme Court (“SC”) alleging that IPRA’s provisions on IPs’ ownership and control and supervision over natural resources located in ancestral domains and lands are unconstitutional in violation of the Regalian doctrine. (Cruz v Secretary of Environment and Natural Resources, et al.)

Of the fourteen (14) justices who participated in deliberating the petition, seven (7) voted to dismiss the petition and seven (7) other members voted to grant the petition. As the votes were equally divided and the necessary majority was not obtained, the case was redeliberated upon. However, after redeliberation, the voting remained the same and thus, pursuant to Rule 56, Section 7 of the Rules of Civil Procedure, the petition was dismissed and IPRA was declared constitutional.

The SC held that the rights given to the IPs regarding the exploitation of natural resources under Sections 7 and 57 of IPRA only amplified what has been granted to them under existing laws but the State retains full control over the exploration, development and utilization of natural resources.

The SC interpreted Section 57 as only granting to IPs ‘priority rights’ in the utilization of natural resources, not absolute ownership nor exclusive rights but only the right of preference or first consideration in the award of privileges provided by existing laws and regulations, with due regard to the needs and welfare of IPS living in the area.

The SC stressed that the grant of priority rights does not preclude the State from undertaking activities, or entering into co-production, joint venture or production-sharing agreements with private entities, to utilize the natural resources which may be located within the ancestral domains nor is there any intention, as between the State and the IPs, to create a hierarchy of values.

Also, the grant of priority rights to the IPs does not mean excluding non-IPs from undertaking the same activities within the ancestral domains upon authority granted by the proper governmental agency because to do so would unduly limit the ownership rights of the State over the natural resources.

However, the SC declared the need for prior informed consent of IPs before any Continued on page 14 >

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<Continued from page 12 > search for or utilization of the natural resources within their ancestral domains is undertaken.

Where the State intends to directly or indirectly undertake such activities, it must, as a matter of policy and law, consult the IPs in accordance with the intent of the framers of the Constitution that national development policies and programs should involve a systematic consultation to balance local needs as well as national plans.

IPRA grants to IPs the right to an informed and intelligent participation in the formulation and implementation of any project, government or private, and the right not to be removed therefrom without their free and prior informed consent.

While the SC allowed the use of customary laws in determining the ownership and extent of ancestral domains on the basis of Art XII Section 5 Par 2 of the Constitution, it declared that the use of customary laws under IPRA is not absolute, for the law spoke merely of primacy of use and only prescribes their application where these present a workable solution acceptable to the parties, who are members of the same indigenous group.

This restrictive application of customary laws basically forecloses any further inquiry into the interpretation of traditional resource rights since it is nothing but an aid to the mediation or dispute resolution process among indigenous peoples and not a reference for ascertaining the nature and incidents of their native title.

For this reason, FPIC has been incorporated into the Philippine legal system with administrative regulations dictating the procedures to record and validate consent.

Nevertheless, these regulations have been criticized for turning FPIC into a formality that is “no longer based on customary laws.” [Marcus Colchester, “Free, Prior and Informed Consent Mak14 Philippine Resources

ing FPIC work for Forests and Peoples” (2010)].

with the FPIC process in the guise that IPs are part of their constituencies too.

The Legal Rights and Natural Resources Center (“LRC”)

Conclusion

The Legal Rights and Natural Resources Center (“LRC”) believes that the FPIC process is being reduced to a formal exercise in positive law, allowing the National Commission on Indigenous Peoples, as the designated government authority, to sign away rights to lands and resources by providing certificates of compliance with FPIC. This bureaucratic process according to the LRC is not iterative, nor is it rooted in customary laws and systems of decision-making. [Joji Cariño and Marcus Colchester, “From Dams to Development Justice: Progress with ‘Free, Prior and Informed Consent’ Since the World Commission on Dams” (2010)] The FPIC process usually commences with the mapping of IP tenure rights.

Most often the field-based investigation reveals conflicting claims within or between communities.

Considerable time and resources may be needed to resolve these disputes and antidevelopment interest groups usually take advantage of the dispute to prolong the FPIC process or to make it a total failure so the developer will just walk away.

In my experience as a resources lawyer, the FPIC process may also be taken advantage of by a disgruntled “socio-political faction” or “unrelenting landowner” sometimes becoming a minority right of veto and not the actual decision of the community.

Resources companies are often confounded with the burden of understanding how to engage with indigenous communities in order to seek their consent.

Companies must also deal with the elders, the traditional authorities and various leadership structures at different levels in the negotiation process, which further convolutes the process. Even local politicians have often times meddle

Even if there is significant progress towards acceptance of the right to FPIC, there is still considerable confusion about how this right is most effectively exercised by IPs and best respected by other stakeholders in the resources industry.

International jurisprudence states that it is not enough for governments to invoke the public or national interest when considering allowing development on IPs’ lands; they must satisfy other legal requirements.

As gaining IPs’ consent through a formal and documented process may provide developers a stronger license to operate, it is thus important that developers undertake a thorough understanding of the legal and regulatory framework with IPs. Given the complexity in applying the concept of FPIC, development agencies and the private industry are more inclined to adopt the standard of ‘free, prior, and informed consultation resulting in broad community support’ where ‘broad community support’ is interpreted as requiring ‘good faith negotiation with and informed participation of indigenous peoples’.

In the Philippine context, the ruling of the Supreme Court to uphold the constitutionality of IPRA was due to a technicality.

The resolution mandating the State to consult the IPs in accordance with the intent of the framers of the Constitution when it intends to engage in development activities in IP lands, in effect was a ‘decision without a decision’.

A constitutional revisit of IPRA seems to be in order to put all resource development stakeholders in the proper perspective given the inherent instability of the decision.

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Drawing Lessons from the Past Patricia A. O. Bunye

T

he commemoration of the 60th anniversary of the Philippine Mine Safety and Environment Association (PMSEA) this November is an opportune time to pause and reflect on why all “all roads lead to Baguio” every November, with practically everyone from the mining industry trooping to the City of Pines for PMSEA’s Annual National Mine Safety and Environment Conference (ANMSEC).

A close look at the seal of Baguio City shows that it bears four gold dots that cut diagonally across a field of green. These four gold dots represent the four mining communities that developed around Ba-

guio at the start of the 20th century: Balatoc, Acupan, Antamok and Itogon Suyoc.

As described by Salvador P. Lopez in his book Isles of Gold: The History of Mining in the Philippines, “(T)he story of the mining industry’s growth is most sensationally told as the story of how Baguio transformed from a vast wilderness with patches of human settlements into a bustling metropolis.”

The remarkable gold find in Balatoc in 1929, the second mining boom in the late 1930s and the resulting frenzy over mining stocks all contributed to the rapid development of Baguio, not just as a mining district, but also as a community.

lowlands – technical people, businessmen, labourers, families, others – to the mines. The companies partially subsidized the construction of roads and bridges leading to the mines and supported the budding aviation and shipping industry,” wrote Lopez.

“The industry brought the men from the Growing importance With the growing importance of Baguio and need for mining prospectors and businessmen, among others, to reach it, Benguet Road was constructed. Prior to its construction, it took a 24-hour boat ride from Manila to San Fernando plus a 3 hour horseback ride to reach the area.

Benguet Road was later renamed Kennon Road after Col. Lyman W.V. Kennon, a US military officer recognized for his work with the Corps of Engineers who built it.

Kennon’s efforts in relation to Benguet Road were unprecedented and involved transporting supplies slowly along the dangerous terrain. Today, we take land travel to Baguio for granted.

By the time this article sees print, the much awaited Tarlac-Pangasinan-La Union Expressway (TPLEX), which is expected to complement the Subic-ClarkTarlac Expressway (SCTEX) and cut travel time to Baguio further by another 40 minutes, should have at least been partially opened.

Continued on page 18 >

16 Philippine Resources

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<Continued from page 16 After the completion of Benguet Road, Daniel Burnham, the American architect and urban planner best known for his work in the cities of Chicago and Washington, DC, presided over the development of Baguio into a well-planned model city.

Other roads were later built as alternatives to Benguet Road, including Naguilian Road which was constructed following a flood that damaged Benguet Road, as well as other roads required to access other areas such as Mankayan Mines.

From 1903 to 1929, Baguio saw the establishment of more parks and recreational facilities, a race course, public market, churches and school, public utilities such as a telephone system, water supply system, garbage system, slaughter house, ice plant, sewerage system and hydroelectric plant, among many others.

Few places in the Philippines matched this pace of growth during those years.

The Baguio mining district’s dominance in terms of gold production at that time

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.

18 Philippine Resources

was reflected in the distribution of the 1938 total gold production of the country. Baguio accounted for 63%; Paracale-Mambulao, 16%; Masbate, 12%, Surigao, 5% and all others, 4%.

In recent years, however, in the face of other drivers of development such as BPOs and tourism, even local residents of Baguio seem to have forgotten the key role played by mining in the rapid development of the city and its environs.

It must be remembered, however, the emergence of Baguio as a tourist destination and “summer capital of the Philippines” would not have been possible if it had not become easily accessible by land due to the efforts of the mining companies to build roads.

Last year, also on the occasion of ANMSEC, Diwata held a dialogue on “Mining as a Means for Development” in partnership with PMSEA, the South Africa Embassy and Gold Fields Philippines Corporation to discuss a number of relevant issues about mining, including: (a) whether agriculture and tourism co-exist side-by-side with mining; (b) how LGUs benefit from Mining; (c) how LGUs can optimize the contribution of mining companies; and (d) how the mining industry can spur development of host communities.

The highlight of the dialogue was the presentation of South Africa Deputy Minister of Mineral Resources, Hon. Godfrey Oliphant, who spoke on the South African experience in mining. Given Baguio’s rich mining history, it was therefore a surprise that even regional representatives of government agencies involved in the mining industry did not appear to be fully convinced of its contributions to economic growth.

It is against this backdrop that DiwataWomen in Resource Development, Inc. (“Diwata”) is holding its second forum in Baguio entitled “Conversations with the Daughters of Mining’s Dirty Dozen” on November 20. “Mining’s Dirty

Dozen” refers to the first twelve graduates of Mining Engineering of the Mapua Institute of Technology on whom a book of the same title was written in 2007 by Mercedes Balota-Suleik and Zorayda Amelia Capistrano-Alonzo, daughters of Victor E. Balota, and Pablo M. Capistrano, respectively. The other ten Mining Engineering pioneers were: Arturo P. Alcaraz, Gregorio M. Campomanes, Pablo M. Capistrano, David P. Cruz, Lazaro A. Cruz, Honesto A. Gapud, Jose G. Licuanan, Ignacio S. Antonio, Bienvenido Garcia, Lauro A. Ferrera and Mauro L. Gonzales.

The book tells the story of the lives of these daring pioneers “who dug and milled the precious ores from the bowels of our land, who enabled the creation of so much wealth for our country and its people”.

It is noteworthy that, when the “Dirty Dozen” took the examinations for mining engineers, there were more foreign than Filipino candidates. It is not surprising, however, that the Filipinos acquitted themselves quite well, with Licuanan, Balota and Alcaraz placing third, fourth and fifth, respectively.

As Diwata sees itself as a facilitator and enabler of frank, open, and always constructive discussions of issues, we hope that the “Conversations with the Daughters of Mining’s Dirty Dozen” will result in a better understanding of both the challenges faced by the mining industry and how these were overcome from the perspective of the families of these pioneers.

Invited to join the conversations with the authors of the book, Alonzo and Suleik, are Baguio’s government officials, businessmen, opinion makers, academicians, students and civic leaders.

“Conversations with the Daughters of Mining’s Dirty Dozen” will be held on 20 November 2013, 2-5 pm, at the Hill Station, Casa Vallejo, Baguio City.

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Mining Industry: Stuck in a Zero Sum Game

By Rene Raymond R. Rañeses, Manila-based analyst, Business Intelligence Department, Pacific Strategies & Assessments (PSA).

exploit their nationwide and global networks to strengthen their anti-mining campaign in the Philippines.

A very vocal anti-mining Catholic Church, and polarized communities threaten the political survival of local elected officials. Between these actors and foreign mining companies, which cannot participate in partisan politics, the odds are easily stacked against the mining industry.

Not Digging It Official government pronouncements pay lip service to promoting the mining industry, but actions speak louder than words.

W

ith an estimated total value of US$850 billion, the promise of still unexplored mineral and metal deposits deep under the largely impoverished Philippine countryside is substantial enough to fire up the greed of local politicians; and fuel sentiments of nationalism and anxieties among socially influential groups.

The national government has recognized the mining industry’s potential contributions to gross domestic product (GDP) – at 0.7 percent in 2012.

The figure could reportedly grow to two to three percent of GDP if the industry becomes fully developed. However, does the Aquino administration have the political will to advance national interests over local disputes and often misinformed local anti-mining activism?

National regulators face a tough balancing act between promoting macroeconomic goals and industry needs, while ensuring support from local governments. In the countryside, environmental activists are able to

20 Philippine Resources

Although unable to govern effectively because of corruption issues, the preceding administration of President Gloria Arroyo vigorously pursued plans to attract mining investments.

During her term, Arroyo established a public-private consultative body that regularly met to harmonize competing stakeholder interests.

As it is with new administrations in the Philippines that win elections by demonizing their predecessors, for unexplained reasons, President Aquino dismantled the consultative body when he assumed power in 2010.

The Aquino administration came up with his its own mining policy two years later that included the creation of the inter-government agency Mining Industry Coordinating Council (MICC) to resolve outstanding mining policy issues.

It is worth noting that among the coalition partners that campaigned for Aquino were staunch anti-mining civil

society groups and church-affiliated organizations.

After alienating the religious sector with his support for the passage of the highly controversial Reproductive Health Act in 2012, Aquino may not be keen on further antagonizing these church groups, many of whom, voted for him and his political associates. Industry sources say that Aquino’s MICC hardly consults them, and in fact refuses to invite them to meetings. Mining firms claim that instead of collaborating with them, government officials tend to be more dominating.

The government’s official mining policy declaration contained in Executive Order 79 issued last year avoids rather than directly confronts the industry’s problems.

Although the order upheld the supremacy of national government policies over local government units (LGUs), it also extended a moratorium on the issuance of new mining permits until Congress amends the existing revenue sharing agreement between the national government and mining companies.

Under the 1995 Philippine Mining Act, firms in a minerals development agreement with the government, pay two percent in excise taxes. Aquino’s proposal raises the excise tax to a new rate of ten percent.

Oral arguments called for by the Supreme Court two months ago showed signs that the country’s highly activist and nationalist judiciary is yet again poised to intervene and rule in favor of raising mining taxes after promining groups questioned the legality of President Aquino’s executive order.

Continued on page 22 >

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www.amcoilandgas.com

Resources Commentary Training November 2013 - January 2014

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< Continued from page 20 Industry trade organizations led by the Chamber of Mines of the Philippines (CoMP) met the proposed measure with frustration. CoMP President Philip Romualdez warned that increasing the excise tax would give half of a mining company’s annual earnings to the government as at present, mining firms are already paying 12 other forms of taxes, including five percent in royalties. Romualdez cautions that the government may not meet its targeted US$12 billion in mining investments in 2013; at least eight mining firms have put their investments on hold.

Additional levies on top of existing problems according to him will literally kill the industry.

President Aquino and his government mining bureaucrats are lining up for a tug-of-war scenario between national government and LGUs. But indecisiveness, policy uncertainty, and buck-passing have placed the former in a very weak position relative to the supposedly subordinate LGUs.

Some mining industry experts question whether the national government is even playing the game at all. In the meantime, mining firms are feeling the squeeze.

A Steep Cost for Finding Gold The case of the US$5.9 billion coppergold project in Tampakan, South Cotabato Province in Mindanao reveals the costs of this national governmentLGU tug-of-war. Last month, Sagittarius Mines Incorporated (SMI) and its major shareholders Swiss company Glencore Xstrata and Australia’s Indophil Resources, proponents of the 10,000 hectare Tampakan mining project, laid off some 920 pre-construction workers (representing 85 percent of total workforce) and slashed monthly expenditures to US$1 million from US$4 million.

The proponents claim that they cannot see light reaching the dark tunnel of the process in securing necessary regulatory permits from local officials and communities any time soon, even after spending US$500 million for the initial phase of the project.

Mindful Miners Source: PSA Research

S

MI, which committed to reforest 270 hectares, already covered 284 hectares as of December 2012.

SMI supports the government’s Community-Based Forestry Management (CBFM) program by providing funds for reforesting denuded or barren areas and improving forest cover in the Southern Mindanao and Central Mindanao regions.

Four CBFM areas in South Cotabato have since benefited from SMI assistance. The 82-hectare CBFM in Balasiao village received PhP2.2 million (US$50,228) while Danlag village was funded with PhP2.2 million (US$50,228) for its 80-hectare forestry area.

In 2012 SMI concentrated its support to Buto and Palo villages in Tampakan by providing in PhP3 million (US$68,493) for reforesting a 100-hectare forestry area.

22 Philippine Resources

Although SMI has already acquired the previously twice-denied environmental compliance certificate (ECC) from the national environmental regulatory body in February 2013, SMI still faces a politically inspired South Cotabatowide ban on open-pit mining that prevents it from fully operating.

SMI’s predicament is unfortunate and highlights the opportunities the Philippine economy keeps on missing, no thanks to the hostile political and regulatory climate. With an estimated 17-20 year operating lifespan, the Tampakan project was supposed to mine some 15 million tons of copper and 18 million ounces of gold—the largest of such deposits in Southeast Asia.

Proponents say the project could also generate US$7.2 billion in total tax and royalty revenues, provide at least 10,000 direct jobs, approximately 60,000 indirect jobs, and prioritize livelihood opportunities to 5,000-member host B’laan indigenous people’s (IP) community in the area who have expressed their approval for the project.

Poor implementation of rules and the lack of oversight that have caused past mining-associated accidents such as tailings spillovers and infrastructural collapse at the Marcopper tragedy in Marinduque and the Padcal leakage in Benguet continue to fuel negative public perceptions about mining. Although some mining firms are not completely without fault, most, including SMI have actually contributed to local environmental rehabilitation efforts even before operations (see textbox for examples).

Technical experts, particularly mining engineers led by Philippine Society of Mining Engineers (PSEM) President Cesar Lao and Mindanao Association of Mining Engineers President Lucio Castillo and even National Institute for Geological Sciences Director Carlo Arcilla, have vouched for the safety and productivity of open-pit mining procedures.

Continued on page 24>

Economic Commentary November 2013 - January 2014

www.philippine-resources.com

ADB Says Philippine Economy Surging But Job Creation Lagging

T

he Asia Development Bank (ADB) has sharply upgraded its 2013 GDP growth forecast for the Philippines, but warns that growth has yet to generate new jobs.

It reported recently that booming investment and consumption continue to underpin an economic renaissance in the Philippines, but robust growth has yet to generate sizeable numbers of new jobs, says a new Asian Development Bank (ADB) report.

“The economy is riding high on the back

<Continued from page 22 Meanwhile, local town officials and community leaders supportive of the project are frustrated with their provincial authorities.

The provincial government of South Cotabato is not expected, however, to undo its own ordinance. Doing so constitutes political suicide amid powerful opposition from the Catholic Church and anti-mining civil society groups that have proven their capacity to take the campaign to national and international arenas and damage a firm’s reputation.

A court order striking down the ban on open-pit mining is the most effective remedy as it shields local politicians from responsibility.

However, government regulators appear unwilling to take the case to the country’s snailpaced court system. The stalemate is increasingly spiraling towards a bleak zero-sum game.

From the Mines and into the Pits of Politics Some mining industry sources say they can afford to wait for a friendlier business climate. However, not all 24 Philippine Resources

of hefty domestic demand and investment, low inflation and interest rates, buoyant remittance flows, and upbeat business sentiment,” said Neeraj Jain, ADB’s Country Director for the Philippines.

graded its 2013 gross domestic product (GDP) growth forecast to 7.0% from 6.0 % in April. For 2014, growth is now estimated at 6.1%, from the previous projection of 5.9%. In 2012, growth reached 6.8%.

“However the good times are not translating into jobs with over a quarter of all Filipino workers still unemployed or underemployed.”

In the first half of 2013, the economy surged 7.6%, supported by spending linked to elections, strong investment in construction, and a further expansion of the services sector, which accounted for half the GDP growth. The performance

In an update of its flagship annual economic publication, Asian Development Outlook 2013, the ADB sharply up-

Continued on page 26>

have the same level of patience. Major SMI shareholder Glencore Xstrata, for example, has made it clear in its global presentation last week that it is not interested in developing greenfield mining projects, such as Tampakan, and that its 62.5 percent shares are now up for sale.

Some mining industry experts caution Philippine politicians to be careful. The country has an estimated 14 billion tons of metallic ore and over 69 billion tons of non-metallic ore deposits—which ranks the Philippines third in the world in gold reserves; fourth in copper; and fifth in nickel.

Shopping mall magnate Henry Sy of SM Investments Corporation and business tycoon Ramon Ang of San Miguel Corporation have expressed interest in acquiring shares from SMI. While a joint venture with local mining firms may boost the project’s bargaining powers through the influence of these companies in negotiating for a policy reversal, it also exposes the opposing logic that lie at the root of the present stalemate:

These are not infinite resources, however, compared to the seemingly infinite interests of politicians. Political will and strategic deployment of political capital on the part of national authorities to influence local legislative bodies to reverse their anti-mining ordinances is a good start. Facilitating fair and transparent mechanisms for stakeholders consultation, issuing consistent public pronouncements, and scrapping unfair legislative proposals would definitely send the signal that the Philippines is going for the gold.

• the short-term outlook and immediate needs of Filipino politicians who need to satisfy their local constituents and neutralize opposition to get re-elected; • the long-term return of investments associated with the mining industry and the costs of sustaining community related services to keep politicians and local communities happy.

PSA conducts specialized 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 November 2013 - January 2014

www.philippine-resources.com

Developing East Asia slows, but the Philippines maintains growth

D

eveloping East Asia is growing at a slower pace but the Philippines expects to buck this trend in the next three years, says the East Asia and Pacific Economic Update released today by the World Bank.

The positive forecast for the Philippines is attributed to strong private consumption on the back of vibrant remittances, continuing expansion of business process outsourcing and increasing government

spending on infrastructure.

According to the report, the growth forecast for developing countries in the East Asia and Pacific is 7.1 percent for 2013, and 7.2 percent for 2014. Excluding China, the region is expected to grow at 5.2 percent in 2013 and 5.3 percent in 2014.

The Philippines is forecast to grow by 7 percent this year and 6.7 percent in 2014, a revision from the report’s previous

forecast in May of 6.2 percent and 6.4 percent, respectively.

The 2013 growth forecast for China is 7.5 percent, down slightly from last year’s 7.8 percent as it shifts from an export-oriented economy and focuses on domestic demand. Growth in larger middle income countries including Indonesia, Malaysia, and Thailand is also softening in light Continued on page 28>

<Continued from page 24 was, however, tempered by a fall in export volumes.

Looking ahead, the ADB says the same drivers will continue to fuel economic activity, supported by the benign inflation and interest rate environment, ample liquidity, and a rise in government spending.

However, according to the ADB, at the same time the authorities will need to keep a close eye on credit conditions with the possibility of a central bank tightening of monetary policy next year. Strong domestic demand and a weaker peso may

put some upward pressure on inflation in 2014.

The ADB said recent financial jitters sparked by expectations of a wind-back of the United States Federal Reserve’s quantitative easing operations have raised concerns about the impact of an exodus of foreign capital from emerging markets.

Well placed However, the ADB says the Philippines is well placed to withstand any volatility with its current account firmly in surplus and high foreign exchange reserves. Its

external debt as a share of GDP is also on a downtrend and the banking sector is healthy, with strong capital adequacy ratios and low levels of non-performing loans.

According to the ADB, the challenge for the economy, however, remains job creation, the report says. It said employment generation over the past two years has fallen short of the official goal of adding 1 million new jobs a year needed to absorb new entrants into the labor force and to put a dent in joblessness. Currently about 3 million people are unemployed and another 7.3 million don’t have enough work.

The ADB says services cannot absorb all job seekers, and with employment in manufacturing declining over the past two decades, there is pressure to reinvigorate the sector so more work can be created for semi- or unskilled workers.

It added that this requires sustained efforts to clear obstacles to direct investment, to upgrade infrastructure, and to make improvements to governance.

The ADB says the government must also step up work with the private sector to develop plans for the development of niche market industries in manufacturing and agribusiness on which the Philippines could capitalize.

26 Philippine Resources

Economic Commentary November 2013 - January 2014

www.philippine-resources.com

< Continued from page 26 of lower investment, lower global commodity prices and lower than expected growth of exports.

“East Asia Pacific continues to be the engine driving the global economy, contributing 40 percent of the world’s GDP growth—more than any other region.

With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable,” said Mr. Axel van Trotsenburg, World Bank East Asia and Pacific Regional Vice President.

“Reforms to enhance competition, protect property rights, simplify business regulations, and increase investment in infrastructure, education and health will boost the Philippines’ efforts to achieve inclusive growth—the type that creates more and better jobs and reduces poverty,” said Mr. Motoo Konishi, World Bank Country Director for the Philippines.

According to World Bank Lead Economist Rogier van den Brink, the Philippines’ strong macroeconomic fundamentals, characterized by low and stable inflation, healthy external balance and stronger government finances have shielded the economy from the persistent weaknesses in the global economy.

As the recovery picks up in the United States (US), Japan and the Eurozone, with growth accelerating in the second quarter of 2013, developing countries in East Asia stand to benefit because of their high trade shares in the economy.

But they need to be better prepared for potentially disruptive adjustments.

The expansive fiscal and monetary response to the global economic crisis has also built up vulnerabilities in many countries. Authorities need to be ready to respond to a steady increase in interest rates in advanced economies, and redouble their efforts to restore and maintain financial stability.

Over the past few months, speculation about the withdrawal of quantitative easing in the US led to stock market sell-offs and currency depreciation, hurting countries with large foreign participation in their financial markets.

In the long term, as higher global interest rates are likely to affect investment, accelerating growth and poverty reduction depends critically on advancing structural reforms. Countries need to improve their investment climate and invest more in infrastructure, while making public investment more efficient.

“The Federal Reserve’s decision to delay tapering stabilized markets for now, giving countries a second opportunity to take measures to lower risks from future volatility,” said Mr. Bert Hofman, World Bank East Asia and Pacific Chief Economist.

“Reducing reliance on short term and foreign currency denominated debt, accepting a weaker exchange rate when growth is below potential, and building policy buffers to respond to changing global liquidity conditions are some of the ways that can help countries be prepared.”

The impact of tapering on capital inflows in the region may also be offset by “Abenomics,” Japan’s new strategy to revive growth, which could increase Japanese investment in the region.

Firmer global growth prospects can help developing countries pursue reforms enabling them to benefit from the recovery and put their own growth on a more solid footing. Governments need to address fiscal risks and create space to support long-term growth, with measures including reducing energy subsidies.

“Structural reforms that will give people the opportunity to share in the gains of progress hold the key to future growth,” said Mr. Hofman.

The East Asia and Pacific Economic Update is the World Bank’s comprehensive review of the region’s economies. It is published twice yearly and is available free of charge at http://www.worldbank. org/eapupdate.

PCCI members access ASEAN market

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embers of the Philippine Chamber Commerce and Industry (PCCI) nationwide can now access a two-billion strong market in ASEAN, China, Japan and South Korea, through the East Asia Business Exchange (EABEX) Portal, an initiative of the East Asia Business Advisory Council (EABC) in partnership with the various chambers of commerce across East Asia.

39th Philippine Business Conference (PBC) on 23 October at the Manila Hotel. EABEX is a platform that enables companies, especially small and medium enterprises (SMEs) to connect and do business with their counterparts in East Asia through online business matching and trade.

“We are glad that EABC has initiated this project to support chamber members across East Asia to seamlessly connect PCCI President Atty. Miguel B. Varela and transact with one another through announced that the EABEX portal will the online portal. This is something our be presented to PCCI members at the members should fully utilize to expand 28 Philippine Resources

their market in the region,” Mr Varela said.

Under this scheme, Mr Varela explained that PCCI members will be provided with a free membership account that will allow them to engage with members of top business chambers in ASEAN, China, Japan and South Korea; connect to verifiable and reliable suppliers in the region; promote products for free and with value added services such as the optimization on the use of free trade agreements (FTAs) and tariff database.

November 2013- January 2014

www.philippine-resources.com

Phil Stock Exchange Celebrates First Trader’s Launch

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he Philippine Stock Exchange (PSE) hosted a bell ringing ceremony to officially launch BA Securities Online, the first online trading platform to go live using the PSETradex. This trading platform developed by the Exchange enables trading participants to give their clients access to real-time market information and trading capabilities through an internet-based

“The launch of the PSETradex is a very welcome development. We view this as a new opportunity to tap into the retail investing market not just locally but especially offshore such as China, Hong Kong and Singapore,” said BA Securities Inc. President Bryan Lao Ang in his speech during the bell ringing ceremony of the launch.

“The PSETradex is an initiative of the PSE that presented itself as an obvious course of action to meet our goal of expanding the investor base in the stock market. Against our peers, our retail participation rate indeed lags behind.

“This is the reason why we believe that expanding the online trading capability of our brokers can become a potent strategy to have more Filipinos invest in the market.” PSE President and CEO Hans B. Sicat said.

With PSETradex, the PSE envisions the number trading participants with online trading services to grow in the coming months.

This will support the increasing preference of retail investors to trade online. Aside from a web-based trading management system, PSETradex will soon have a mobile component which will allow brokerage firms that will utilize this trading solution to offer wireless market applications to their clients.

Philippine Resources 29

Community Resources November 2013 - January 2014

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Mining companies lend hand for Bohol quake victims By: Maria Paula Tolentino

T

he recent devastating earthquake in central Philippines took many lives and left many residents in Bohol province refusing to return to their homes in fear of continuing aftershocks.

Bohol was the epicenter of the quake and the area hit hardest by the 7.2-magnitude temblor.

According to Romeo Bernardo, deputy administrator of the National Disaster Risk Reduction and Management Council (NDRRMC), most of the reported deaths and injuries have been in Bohol.

The NDRRMC has estimated the number of people affected in the centtral Philippines to around 3 million.

Private companies lend a hand In the wake of the disaster, mining companies, led by the Philippine Mines Safety and Environment Association (PMSEA), sent geologists and mine workers to the worst-hit towns in Bohol to help clear rubble from landslides and search for victims still trapped under collapsed structures.

In addition, some of the Philippinesâ&#x20AC;&#x2122; biggest companies have rushed in to provide relief and assistance to victims. Three major television networks, all of which have their own philanthropic foundations, were quick to provide aid in the form of food, water and clothing.

Structures gone The disaster management council reported that a total 39 bridges and 18 roads in the provinces of Bohol, Cebu and Negros

Occidental were damaged, though most are still passable. A preliminary estimate from the central government placed the value of the damage at PHP867 million.

But lawmakers and conservationists say that number could climb as the cost of restoring centuries-old churches â&#x20AC;&#x201C; a major tourist draw for Bohol province â&#x20AC;&#x201C; and damage to other infrastructure and homes is assessed.

Trixie Angeles, vice chairwoman of the National Committee on Monuments and Sites at the National Commission on Culture and the Arts, said in a television interview that it would cost at least PHP100 million to restore just four churches in Bohol in the towns of Loay, Dauis, Baclayon and Loboc.

Challenges Meanwhile, around 55,000 relief packs were prepared to provide relief to affected Bohol residents.

Rescue workers were hindered in reaching many victims with many of the roads in Bohol damaged and needing to be cleared of landslides. Another problem with relief efforts was the fear of continued aftershocks. More than 2,000 aftershocks had been recorded.

30 Philippine Resources

Community Resources

November 2013 - January 2014

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Bohol victims glad miners came

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e were glad the miners came,” said Ramil, a 30-yearold local volunteer from Sagbayan, Bohol.

later learned, proved to be vital as they encountered landslides, collapsed structures, closed roads, and the absence of water and electricity supplies.

The miners he was referring to were the 55-strong search, rescue and retrieval teams from Carmen Copper Corp., Philex Mining Corp., Oceana Gold Philippines, Philsaga Mining Corporation, and Bohol Limestone Corp, all members of the Chamber of Mines of the Philippines (COMP) and affiliated with the Philippine Mine Safety and Environment Association (PMSEA).

“We reached Bohol Wednesday, then proceeded to Biga, Antequera where we helped in the search and recovery of two bodies buried by landslides,” said Alvin Dela Cruz, a member of the search and rescue team of Philsaga Corp., a mining company from Agusan del Sur.

COMP and PMSEA member teams brought with them mining equipment, breathing apparatus, cutters and demolition hammers, generator sets and first aid kits. The equipment, the miners

32 Philippine Resources

“We then proceeded to Sagbayan, Bohol to help in the search and recovery of five victims, all minors, of a landslide in Bayong Falls, in Katipunan, Sagbayan,” Dela Cruz added.

Travelling from Agusan del Sur, Dela Cruz’s team proceeded to Bato, Leyte

-- about 307 kilometers away -- before boarding a barge to cross to Ubay, Bohol. From Ubay they paid a courtesy call at the Governor’s mansion in Tagbilaran City before they could finally proceed with their mission.

“Shovels and hands were all we could use, the boulders were too huge and we needed a back hoe at least” Dela Cruz said.

Travelling in their company van, Dela Cruz said his team brought along equipment that are not dependent on electricity -- a vital strategy in search, rescue and retrieval operations in remote and devastated areas.

“We brought a small generator for camp survival. We are here to stay until our mission is done,” he said.

Community Resources

November 2013 - January 2014

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Mining firm helps educate the young in Mindanao

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eacher Mary Jake Garzo is the quintessential overworked public school teacher in many remote barangays in Mindanao.

She handles classes from kindergarten to Grade 2 at the Upper Camili Elementary School. Very few children of age are in school. In fact, the elementary school has a total of 57 students from kinder to Grade 6.

And there are only two of them teaching in this remote public school.

But since her co-teacher Ma’am Elsa Amit is the teacher in charge of the school, Teacher Mary often finds herself in one classroom teaching all grade levels - simultaneously.

How does she do it?

be there in front of them when they have something to ask,” Teacher Mary said.

The trick is for her to assign works specific for the grade level of her students.

But inevitably, some students will get interested in other grade levels.

“I would only allow them to participate with other level activities provided they would finish their assigned works,” she explained.

In an ideal world, each grade level should have one teacher each. But Teacher Mary understands, even though it is hard for her to accept the reality of education in remote rural areas.

So remote that attendance drops to 50 percent during rainy days with students taking an average of 1 hour of walk before reaching school.

“I teach them just in one room. I want to

Moreover, the school seldom gets the assistance badly needed from the national government to ensure students go finish and do not drop out.

So, the two of them often sought help from the private sector of which the King-king Copper-Gold Project (KGCP) is working to develop a mining project in nearby Barangay Kingking is a generous provider.

“KGCP has been providing us with school supplies. We turn to them for prizes during our foundation activities,” Teacher Mary said.

Right now, she added, they have other pending requests from the company.

She already mentioned the erratic water supply, the broken down toilets and the lack of school sound system in addition to the badly needed repair of their classroom.

Community engagement KCG has been very active in projects and has engaged the community in various social and livelihood projects in and around its mining site in Pantukan, Compostela Valley.

KCGP is a partnership between Nationwide Development Corporation (NADECOR) and St. Augustine Gold & Copper Ltd. (SAGCL) wherein the two companies are working together to develop the project while partnering with the community to meet the needs of Pantukan. NADECOR and SAGCL, are currently engaged in drilling and exploration activities in the remote village of King-king in Pantukan, Compostela where the mine is expected to yield 1.43 million metric tons (MT) of copper, 5.43 million oz (168,950 kilo-

King-king’s help brings lots of big smiles.

34 Philippine Resources

Continued on page 36>

Community Resources November 2013 - January 2014

www.philippine-resources.com

< Continued from page 34 grams, or kg) of gold and 11.65 million oz (362,356 kg) of silver in its 22-year life.

In just a little over 2 years, it already has poured roughly P30 million (US$700,000) in community development projects.

It is also focusing on health and nutrition and has provided the town with free use of its ambulance. KCGP has also made available its medical team to residents of the town and regularly donates free medicines.

The project has been extending their medical outreach programs in other municipalities in Compostela Valley and has been organizing feeding programs.

But education is the core direction of its

corporate and social responsibility program.

KCGP is committed to long-term educational enhancement with a goal of employing students in its impact communities. In line with this, it has sought partnership with the TESDA Regional Training Center in Davao City for skills training in preparation for the construction and operation of the project.

KCGP has been providing generous scholarships, including housing allowances, to the young members of the Mansaka tribe and Pantukan community so they are able to attend college or vocational school. The scholars were selected with the involvement and endorsement of the tribal council and local Barangay Council.

Moreover, it has also already donated educational kits, materials and equipment –

The students really appreciate the donation of a modern TV. 36 Philippine Resources

including computer sets – to schools in around the community for better teaching and learning. Among the recent recipients of these are Ayan Elementary School, Doroteo Castro Elementary School and Sta. Teresa Elementary School.

It has also provided Magnaga Elementary School with construction materials for the repair, improvement and building of school rooms and facilities and has donated digital camera to Gumayan Mansaka Tribal Council.

Handing out free school supplies is a regular company activity. Benefitting from this is Teacher Mary’s school in the subvillage of Upper Camili which is one of the access areas going to KCGP. Soon Teacher Mary will have her wish for her school in Upper Camili, with KCGP’s continuing community engagement projects.

Conference News November 2013 - January 2014

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Philippine Mining Conference a critical coming together

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s the official media partner of the 2013 Philippine Mining Conference held at Sofitel Plaza from September 10 – 12, 2013, Philippine Resources Journal joined the Chamber of Mines and the industry’s best minds to meet, discuss and generate ideas to face the many challenges of Philippine mining.

“Indeed, the economic opportunities in the mining industry are as abundant as the Philippines’ mineral deposits,” stated the honored guest speaker and Philippine Senate President, Senator Franklin Drilon.

The good senator presented seven substantial points for industry consideration.

They are the following: 1) All areas where mining is allowed must be clearly identified and marked.

This is an important step to prevent investors from being misled in investing in areas where mining is not allowed. This move also spares the local community from unnecessary hassle.

2) The grant of mining rights should be limited to those that have complied to the pertinent requirements.

By the same token, those that have been involved in environmental incidents and have not implemented the required remediation measures shall be disqualified.

3) Ban the use of mercury in small scale mining.

4) Cancel all non-moving applications and non-performing mining contract and permit holders.

5) Go after the illegal miners by creating a task force on illegal mining composed of Philippine law enforcement agencies.

6) Small scale mining should be ration-

38 Philippine Resources

alized by declaring the people’s smallscale mining area or Minahang Bayan.

7) Level the playing field by cooperating with the government in checking abuses in the system of incentives and tax holidays. (It was noted that some mining companies have managed to get away from tax obligations such as locating their mineral processing plants in Ecozones to avail of tax holidays).

“The people, through taxes, royalties and other fees, must have their fair share from any economic activity done in the country, especially if it involves the extraction of our natural resources; finite resources; limited non-renewable resources.

“The Filipino people are entitled to their rightful share in what the industry would earn from these finite resources” the Senator added.

Minerals owned by Filipino people not by license holders Drilon further mentions that the 3-day mining conference was an opportune time for the mining industry to compare best practices, share new techniques and showcase new technologies and processes.

He mentions that license holders should practice transparency and that be made aware that the minerals they extract are still 100% owned by the Filipino people and with good reason: “While we support the development of the mining industry, we must take measures to ensure that social and environmental costs will not outweigh the economic benefits. It is imperative that we practice transparency. Like any industry, the mining industry must do its share in national development. More so, because it is extracting our natural wealth.

“While we recognize the high economic risk involved in mining as against the success rate, we must remember that the minerals are owned by the Filipino people, and not by those who have mining licenses. Our natural resources should be utilized properly and sustainably, to protect the interest of future generations. It is worth noting that every cubic meter of ore that is mined today, would mean depriving the future generation of a cubic meter of ore. The government is taking a leap of faith in entrusting these limited assets to entrepreneurial hands.”

The Philippines as a Extractive Industry Transparency Initiative (EITI) candidate During the three day conference, the subject of EITI was also brought to light. The EITI Standard is a global transparency standard that ensures disclosure of government revenues from natural resources.

The Philippines was recently admitted as an EITI candidate in May 2013.

The private sector has long initiated the Philippines’ membership into the EITI, led by the Chamber of Mines of the Philippines (COMP) as early as 2005.

The global Extractive Industry Transparency Initiative (EITI) is a step towards combatting corruption and the misappropriation of funds, so that the wealth generated by mining firms can serve as an engine of economic growth and contribute to sustainable development and the reduction of poverty, a World Bank official said. On other hand, Atty. Alessandra Ordenes, National Coordinator of the Philippines EITI Secretariat, revealed that the new EITI rules require revalidation only every after three years instead of five. However, Ordenes admits the one of the challenges facing EITI implementation is not just the collection of data but making sure the data obtained will satisfy the EITI requirement.

Energy News November 2013 - January 2014

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BHP Billiton finally gains Palawan go-ahead for Cinco-1 well

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HP Billiton Petroleum has scored a major breakthrough in its plans to drill the Cinco-1 exploration well in the Palawan Basin Service Contract SC55 off the Philippines after finally receiving formal Strategic Environmental Plan Clearance from the Palawan Council for Sustainable Development (PCSD).

Timing of the drilling of Cinco-1 is now down to discussions between BHPB and the Philippine Department of Energy (DOE).

BHBP has previously declared a force majeure over SC55 after significant delays in the approvals, with the drilling of Cinco-1 well over 12 months behind schedule.

SC55 joint venture partner, Otto Energy, said the JV will seek confirmation from the DOE of the revised work program timing following the suspension due to force majeure.

Following official receipt of the SEP Clearance, BHPB will finalise the contracting of an appropriate deepwater drilling rig in order to undertake drilling of Cinco-1.

Otto recently stated that the SC55 Operator, and joint venture partners, remain committed to drilling Cinco-1.

According to Otto, a robust, diverse and extensive portfolio of exploration prospects and leads has emerged in SC55 from recent analysis of more than 2,400 km2 of 3D seismic data acquired in 2010.

It said this portfolio has significant depth and variety and will present a high impact exploration drilling program for Otto over the remaining term of the exploration licence.

SC55 contains both carbonate and sandstone reservoir targets in a variety of settings, with the Cinco and Hawkeye prospects providing an indication of this diversity of play type and represent drill mature prospects in the present portfolio.

New licence Otto Energy Ltd has also announced it has been formally awarded Service Contract 73 under the Fourth Philippine Energy Contracting Round.

Otto stated that the award of this service contract is a reflection of its significant expertise in the Philippine oil and gas in-

dustry.

Otto will now commence a program involving the reprocessing of existing seismic data with a minimum financial commitment of US$0.5 million within an initial period of 18 months.

Service Contract 73 is an offshore block located in the southern part of the Mindoro Basin – Cuyo Platform, a continental rift basin offshore the Philippines. It covers around 8,440 km2 with water depths ranging from 100 metres to 1,300 metres.

There is an existing 2D seismic data set of over 3,000 kilometres covering the block.

The petroleum play types identified in Service Contract 73 are reef build-ups, fault blocks and anticlines. The reservoir intervals are Early Miocene to Pliocene carbonates and Early to Late Miocene carbonates and clastics.

Oil has been discovered with an Extended Production Test conducted in 1994 at the Maniguin wells near the block. The occurrence of oil seepages in the Mindoro Island region also confirms the presence of an active petroleum system in the area.

Gas2Grid on the right track in Cebu

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as2Grid Limited has taken a significant technical step towards commerialising its onshore Malolos-1 oil find in Cebu.

The company recently lodged an application with the Philippine Department of Energy (DOE) to declare Malolos-1 an oil discovery.

The application is made under the terms and conditions of the Service Contract covering Malolos-1, Gas2Grid successfully perforated and flow tested two oil

40 Philippine Resources

bearing sandstones in the well at depths of 2,219-2,227.5 metres (7,280-7,308 feet) and 2,178-2,195.4 metres (7,1527,207 feet). Oil was produced on shortterm 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.

According to Gas2Grid, following the integration of those results with all other available technical data leads it to consider Malolos-1 is an oil discovery.

The company said it was also confident that further testing of Malolos-1 will result in commercial oil production from a much larger Malolos oil field than currently assessed.

Initial assessment of the oil volume pote ntial within the Malolos oil field is a “Contingent Resource” oil in place in the two oil productive sandstones in the range of between a “Low Estimate” (1C) of 4 million barrels and a Continued on opposite page >

November 2013- January 2014

www.philippine-resources.com

<Continued from page 40 “High Estimate” (3C) of 42 million barrels, with a “Best Estimate” (2C) of 12 million barrels of “Total Oil Initially in Place”.

Gas2Grid’s next significant aim is to conduct more extended testing of the two oil bearing sandstones which were recently production tested.

In order to complete that longer term testing a beam pump and oil storage will be required onsite.

Gas2Grid said planning is underway to recommence testing when requisite government approvals have been obtained and equipment delivered to site. The estimated cost of this work is US$500,000 - $1 million.

The extended production test will involve individually placing each of the two oil

bearing sandstones on extended pump test for a minimum period of three weeks each (production time may be extended based on results). The production period will be followed by a longer shut-in period to assess the reservoir pressure build-up, the results from which will enable determination of reservoir quality and better assessment of relative size of the oil reservoir.

Gas2Grid believes the longer term testing will also enable an independent expert to certify and convert some of the Contingent Resource of oil in place into Proven, Probable and Possible oil reserves.

Philippine Resources 41

Energy News November 2013 - January 2014

www.philippine-resources.com

Galoc II ready to bring new oil riches to Philippines

T

he Philippines oil and gas sector is about to get a boost with the Galoc oilfield joint venture on target to significantly increase production in late November.

Galoc joint venture operator, Australianbased Otto Energy Limited, recently announced it had successfully completed flow testing operations at the two wells that are the key components of the US$188 million Galoc Phase II development, located offshore Palawan.

In mid-October Otto reported that the Galoc-5H well had successfully flowed

oil to surface at a rate of 6,300 barrels per day (bopd).

Otto said the flow rates were constrained and that the initial oil deliverability potential from Galoc-5H under normal field operating conditions is expected to be between 8,000 and 12,000 bopd with final operating rates to be set according to optimum facility and reservoir management constraints. The company said flow test results were in line with the forecast overall field production rate of 12,000 bopd to be delivered once Phase II is brought in to production.

Less than a week later Otto was able to report that the Galoc-6H well had successfully flowed oil to surface at a stable rate of 3,800 bopd.

This well is predicted to have an initial oil deliverability potential under normal field operating conditions of between 4,000 and 6,000 bopd with final operating rates to be set according to optimum facility and reservoir management constraints. Otto said the results from the flow test were in line with the forecast overall field production rate of 12,000 bopd to be delivered once Phase II is brought in to production.

Both wells were drilled by the Ocean Patriot semisubmersible drilling rig, which has been demobilised to Singapore.

Subsea installation Otto also reported that subsea tree installation had been successfully completed for both wells.

Following the successful flow tests and subsea infrastructure installation, operations are focussing on hook-up operations due, with initial production targeted for late November.

Planned upgrades to the FPSO Rubicon Intrepid, which will process the additional Phase II production, have also been successfully completed according to schedule.

The Galoc field is located in Service Contract SC14C (Galoc Sub Block) in 290 metres of water approximately 65km North West of Palawan Island and 350km south of Manila in the Republic of the Philippines.

The Galoc II drilling program was not only a success in proving up the oil for this new project but it was able to be completed with little effect on Galoc production.

42 Philippine Resources

The Galoc-5H and Galoc-6H development wells were drilled within the existing producing field that has delivered over 10 MMbbls of production since the field was commissioned in 2008.

Mining News

November 2013 - January 2014

www.philippine-resources.com

Red Mountain ready to progress Batangas Gold Project

R

ed Mountain Mining Ltd has taken a significant step in its proposed development of its high grade Batangas Gold Project, located 120km south of Manila, with the company announcing recently that it had commenced an independent Scoping Study into gold mining and processing for the project.

The Scoping Study, which is expected to be completed by early December, will examine the viability and high-margin potential of the Batangas mining and processing project and is initially based on

the current Indicated and Inferred mineral resources totalling 5.78 million tonnes at 2.2 g/t gold and 3.3 g/t silver, containing 408,000 ounces of gold and 606,000 ounces of silver at a lower cut-off grade of 0.85 g/t gold.

Sedgman Limited has been appointed to complete the processing engineering study with specialist work on other aspects of the study to include: • Crystal Sun Consulting – mining and infrastructure options;

• Minercon International Inc. – metallurgy; • Technotrix Consultancy Services Inc. environmental and social; • Resource Development Consultants Ltd - geotechnical, processing site, tailings storage facility.

The Batangas project is at an advanced stage and already has a number of positive features including: • An established JORC compliant resource (detailed below); • Granted MPSA’s (Philippines equivalent of Mining leases); • Close to power and port infrastructure; • High grade, at surface mineralisation at Lobo with early stage high cash-flow potential; • 20km from the major industrial centre of Batangas; • Easily accessible by road or sea; • Current high grade resources still open along strike and at depth; and • Drilling campaign, planned to upgrade mineral resources, underway Metallurgical testing on both the SWB and Kay Tanda resources produced recoveries for both the oxidized and fresh material that indicate amenability to “standard” Carbon in Leach (CIL) processing.

Further testing on individual samples and a composite has been commissioned, the results of which will be incorporated into the Scoping Study.

Red Mountain, which is continuing to target high grade near surface miner-

Drilling activities at the south-west Breccia resource area.

44 Philippine Resources

Continued on opposite page>

Mining News November 2013- January 2014

www.philippine-resources.com

<Continued from opposite page alisation at its Japanese Tunnel and Pica prospects within the Lobo prospect area at Batangas, recently reported it had intersected high-grade gold at its Pica epithermal gold target.

The company said diamond drillhole PC 07â&#x20AC;&#x201C;13 had intersected a steeply dipping epithermal quartz-barite-sulphide vein and produced an intersection of 2.5m @ 9.2 g/t gold (Au), 28.4 g/t silver (Ag), 8.6% Zinc (Zn) from 97.9m downhole, including 1.0m @ 14.2 g/t Au, 38.6 g/t Ag, 9.5% Zn. â&#x20AC;&#x153;This is the best gold result achieved to date from the Pica target, and partially confirms the Exploration Target.

Further drilling along strike will aim to extend the mineralisation prior to defining a high-grade vein resource,â&#x20AC;? Red Mountain Managing Director, Jon Dugdale, said.

Drilling completed to date at Pica has focused on defining the extent and orientation of the high-grade vein system on one cross section, 9555N. Further drilling has commenced 25m to the northeast along strike from PC 07-13, with the objective of extending the strike extent of the mineralisation and further confirming the Exploration Target announced in July 2012.

Previous surface mapping has traced the Pica structure, intermittently developed over a 2km strike length to the northeast and southwest.

About the Lobo Prospect Surface trench channel sampling and drilling conducted by Red Mountain Mining and the previous operator intersected high-grade epithermal gold mineralisation in five areas on the Lobo Mineral Production Sharing Agreement namely South West Breccia, Pica, Japanese Tunnel, West Drift and Ulupong

JORC Mineral Resources have been defined for the SWB shoot, totalling Indicated and Inferred 194,000t @ 7.2 g/t gold for 45,000 ounces of gold. This includes an Indicated Resource of 178,000t @ 7.4 g/t Au for 42,000 oz Au and an Inferred Resource of 16,000 t @ 5.3 g/t Au for 3,000 oz Au. Drilling has discovered a new fully intact gold shoot on the West Drift epithermal lode. Initial Mineral Resource estimation is in progress for this shoot.

Drilling and surface trenching has also intersected high-grade gold epithermal vein/lode mineralisation at Pica and Japanese Tunnel. The current drill spacing is of insufficient density to allow estimation of Mineral Resources. However an Exploration Target has been estimated for both prospects, estimated in a range of 400,000 tonnes to 700,000 tonnes grading from 3.6 g/t gold equivalent (Au equ.) to 5.3 g/t Au equ. for 45,000 Au equ. ounces to 120,000 Au equ. Ozs.

Red Mountain has also had drilling success at the Westdrift prospect.

Philippine Resources 45

Community Resources November 2013 - January 2014

www.philippine-resources.com

A Long-term Vision to Reduce Flooding in Metro Manila ‘Lesson not learned,’ wrote Candy Dizon in her blog, at the height of typhoon Maring (international name: Trami) in August 2013. The businesswoman lamented how the combination of bad urban planning and uncollected trash caused the flooding in many parts of Metro Manila and halted progress from monsoon rains enhanced by the typhoon.

Stranded and trapped inside homes for four days as heavy rains battered the metro, citizens deplored the severe flooding which paralyzed the capital Manila and inundated the surrounding provinces of Bulacan, Rizal and Pampanga.

Filipinos filled social media sites with images of submerged cars on major highways, shared videos of people and parts of shacks being swept away by rampaging flood waters on a swollen river.

Days later when the typhoon had passed, a resident of Marikina city posted exasperatedly on Facebook how “flood waters on the major thoroughfares outside our residential area still have not subsided.”

Joop Stoutjesdijk, Lead Irrigation Engineer at the World Bank, observes that at present the city just cannot cope with flooding from events like Maring, and that urban flooding is an increasing challenge to development.

Manila lies in the catch basin between Laguna Lake in the southeast and Manila Bay in the north. Indiscriminate commercial and residential developments have blocked the path of many rivers in Metro Manila, home to some 12 million individuals and still growing.

The state weather bureau said Trami dumped more than a month’s worth of rain (almost 24 inches) in just 24 hours in the Manila Bay area. It has to be noted that such events would cause flooding in even the best prepared cities.

46 Philippine Resources

Leading the development of a 25-year Metro Manila Flood Management Master plan, Stoutjesdijk said that while the Bank has engaged in flood management for a long time in many cities around the world, the plan is one of the first ones that has looked at flood management in a very integrated manner.

The development of the master plan was funded by a US1.5 million grant from the World Bank-administered Global Facility for Disaster Reduction and Recovery (GFDRR) Trust Fund.

The grant was provided by the GFDRR using funds earmarked for the Philippines by the Government of Australia through the Australian Agency for International Development (AusAID).

GFDRR is a partnership of 32 countries and 6 international organizations committed to help developing countries reduce their vulnerability to natural hazards and adapt to climate change.

Stoutjesdijk recalled how the development of a plan was first proposed by the Philippine government after the country was devastated by typhoons Ketsana and Parma in 2009.

Approved by the government in September of 2012, the plan consists of a number of structural and non-structural measures, including a dam in the upper catchment of Marikina city and improvements in the river systems, in particular the Pasig-Marikina river.

The plan also proposes the raising the flood plain along Laguna Lake, located south of Manila, to ensure the safety of some 300,000 people who are affected by regular flooding in the area.

Stoutjesdijk says that while the construction of the dam and related activities such as reforestation of the upper catchment area will take a long time, small interven-

tions are already being implemented by the government using its own funds.

“They’ve started the dredging of water ways and modernizing pumping stations, and the Bank is helping with technical assistance to make sure that the pumps being used are modern ones and best suited for the conditions here in Metro Manila,”explains Stoutjesdijk.

Stoutjesdijk says that drainage is also affected by the issue of solid waste found in waterways.

“One bottle thrown into the river or stream affects the drainage or the pumping stations, because it can cause damage to it.”

At the height of the typhoon, social media also paved the way for acts of altruism, as groups scrambled to organize relief efforts for those displaced by the massive flooding.

According to Stoutjesdijk, increasing awareness about these concepts and the need for better solid waste management is as important as the structural parts of the flood masterplan.

The response to flooding has improved a lot already since Ketsana and Parma.

“Flooding is getting well-known now among the population because it’s an annual occurrence and people are really tired of it,” observes Stoutjesdijk.

While the plan will first target Metro Manila and Laguna, Stoutjesdijk bared that the Bank has also been tasked to develop a flood master plan for the neighboring provinces of Bulacan and Pampanga in the northwest of Manila.

“They have serious flooding every year, and we are looking at solutions not so much on infrastructure, but on concepts like giving room to the river, “ Stoutjesdijk says.

Our Most Valuable Asset : Our Outstanding People For Professional Drilling Services and Advice, please contact : ______________________________ John Penrose Business Development Officer DrillCorp Group of Companies Mobile: +61 (0) 419 914 425 E il john.penrose@drillcorp.com Email: j h @d ill Ken Wilkes Chairman / Managing Director DrillCorp Group of Companies Mobile: +6019 856 0170 (Malaysian) +639209 705340 (Philippines) Email: ken@drillcorp.com

CHINA - Beijing Office Room 604, Building A, Huixin PLaza, 8 Beichen Dong Road, Chaoyang District, Beijing, 100101, P.R. China Tel:+86 10 84980120 Fax:+86 10 84978920 INDONESIA - Jakarta Office Graha Simatupang Tower 2C Grd Flr, Jl. T.B. Simatupang Kav. 38 Jakarta 12540 Indonesia Tel:+6221 7829465-6 Fax:+6221 78843354 LAOS - Vientiane Office Unit 19, Nongteng Village, Sykottabong District, Vientiane, Laos Tel:+856 021612167 Fax:+856 021612167 MALAYSIA - Kuching Office No. 1001 Riverbank Suites, Jalan Tunku Abdul Rahman, 93100 Kuching, Sarawak, Malaysia Tel:+6 082 413866 Fax: +6 082 415866 PHILIPPINES - Manila Office No. 16 South Coast Industrial Estate, Bancal, Carmona, Cavite, Philippines Tel:+63 46 4303517 Fax:+632 5844410 THAILAND - Bangkok Office 140/37, ITF Tower, 17th Floor, Silom Road, Suriyawongse, Bangrak, Bangkok Thailand 10500 Tel:+6622316201 Fax:+6622316204

Mineral Event November 2013 - January 2014

www.philippine-resources.com

Philippine Mining Club Luncheon

T

he Philippine Mining Club Luncheon event on August 11 featured one of the industry’s most respected personalities in Australian mining, Mitchell H. Hooke of the Australian Minerals Industry and the Australian Public Policy Sector.

Mr. Hooke is one of the Club’s biggest celebrity guests to date.

In his opening speech, Mr. Hooke mentioned respect for ‘autonomy’ but strategically added that the Philippines would benefit greatly from learning from other countries when it comes to developing its resources industry.

“I do not subscribe to the idea that I am in a country that feels it has a mandate to go and preach to others as to how to organize their affairs. I am big on national sovereignity and the respect for autonomy and self examination that goes with it.

“But having been here now for 5 days, I think I get it. There can be no greater compliment than to be asked for your opinion. Knowledge without application is merely a library of intellectual learnings without a mission or destiny. Now in this case the knowledge imperative is the sustainable development of natural resources and more particularly in lifting people out of poverty.

A keen audience at the August 11 lunch.

“Free market economics and capitalism, globalization, trade and commerce, democracy and a new found paradigm for sustainable development of mineral resources have a lot to be proud of in lifting people out of poverty.”

He said that mining has and will solve such circumstances: “And I cannot fathom how anybody can witingly or unwitingly condemn people to a life of wretched poverty. But what of the courage to step outside one’s comfort zone?

And what of the convictions of learning from others who have successfully developed their minerals endowment on a platform of mutual respect and trust.

Worldwide, responsible mining has made a remarkable contribution to the upliftment of their economies (Latin America, Africa and other parts of Asia).

When it comes to safety and the rampant use of mercury in mining practices, Hooke stands firm: I can assure you, it is highly hazardous to human health.

Mitchell Hooke.

48 Philippine Resources

Some of the guests at the October 11 Mining Club Luncheon.

Mark Corra, SVP of Finance & CFO, B2Gold spoke on October 11.

On another stance, Hooke tackled the controversy between the Church and the Mining industry: “I can’t, and in any event, I would never be so presumptous as to try to explain why the government and the Catholic church here appears quiet in the face of this global reality, its apparent opposition to mining for the development of the socio-economic advancement of the people it is forced to represent.

“It seems totally incongrous to me that why some of the church hierarchy fails to differentiate between responsible mining and illegal mining.”

While also bringing into light the similarities between the current Philippine state as those with the indigeonous Australians: “What greater contribution, can anybody make to another human being’s welfare than to provide them with dignity of employment and an impound of accountability for their own and their family’s welfare that goes with it.”

The October 11th Luncheon had a presentation from Vancouver-based B2Gold a gold producer with three operating mines (two in Nicaragua and one in the Philippines) and a strong portfolio of development and exploration assets in Nicaragua, Colombia, Namibia and Uruguay.

B2Gold acquired Masbate Gold Project here in the Philippines early this year.

November 2013- January 2014

www.philippine-resources.com

MGB Expecting A Busy 2014

T

he Philippinesâ&#x20AC;&#x2122; Mines and Geosciences Bureau (MGB) recently held a workshop to map out its targets for the major programs, activities and projects for 2014 as it finalized its CY 2014 Work and Financial Plan. The week-long programming workshop was held at the Bayview Park Hotel Manila from September 2-7, 2013.

The said workshop brought together Regional Directors, Division Chiefs, Planning/Budget Officers and program Focal Persons from the MGB Central Office and 15 Regional Offices nationwide.

Specific targets The objective of the exercise was to produce specific program targets and budget estimates based on the 2014 National Expenditure Program released by the Department of Budget and Management, and the newly revised and approved 2014 Major Final Outputs for MGB, which are now made up of mineral resource development and mining regulation services.

Under the mineral resource development services, the MGB aims to cover a total of 684 municipalities and cities for the geohazard assessment and mapping program, which shall identify areas in the Philippines that are vulnerable to landslide and flooding. The said target shall complete the assessment and mapping of all the municipalities and cities in the country by next year.

Under the mining regulation services, the MGB shall intensify its efforts at monitoring approved mining permits/contracts by increasing the frequency from annual to semi-annual/quarterly. The cleansing of non-performing mining contracts, enforcement of violators with lapses in the terms and conditions of their contracts/permits, and apprehension of illegal miners will still remain as top priorities for next year.

Workshop activities included plenary discussions to generate regional targets for the programs, activities and projects. Focus group discussions were also conducted between the Central Office divisions and their regional counterparts to discuss specific issues and concerns.

Philippine Resources 49

November 2013 - January 2014

www.philippine-resources.com

Your first line of defence against corrosion

T

he word corrode is derived from the Latin corrodere, which means “to gnaw to pieces.” Corrosion can be defined as a chemical or electrochemical reaction between a material, usually a metal, and its environment that produces a deterioration.

Mainly caused by sulfur, chlorine, ozone and nitrogen oxides, the effects of corrosion in our daily lives are both direct (corrosion affects the useful service lives of our possessions), and indirect (producers and suppliers of goods and services incur corrosion costs).

The most dangerous of all corrosion are those that occur in major industrial plants (i.e. electrical power plants or chemical processing plants). Plant shutdowns can and do occur as a result of corrosion. This is just one of its many direct and indirect consequences. Some consequences are economic, and cause the following: 1) Contamination of a product 2) Loss of efficiency (i.e. when overdesign and corrosion products decrease the heat-transfer rate in heat exchangers)

3) Loss of product 4) Maintenance and repair 5) Replacement of equipment/buildings 6) Shutdown of equipment due to corrosion failure Methods of Controlling Corrosion: There are five meticulous methods of corrosion control. They are by cathodic protection, coatings, design inhibitors, and material selection. These methods, though effective, has its setbacks as well.

But why go through all that when you can get a sure product that can protect your equipment and immediately cut costs?

Micro environment Intercept Technology works by creating a micro-environment for your product neutralizing those pollutants on contact regardless of changes in temperature and humidity. Corrosion and static electricity are lethal weapons for metals as well as electronics. Intercept was designed to protect against both. So instead of ap-

plying thick, greasy oil, using dangerous chemicals, or relying on extra equipment, Intercept Packaging is safe, effective and easy to use. It’s a clean, simple and easy process, requiring no extra euqipment.

Internationally available, Intercept Technology provides a wide array of protection for your ferrous/non-ferrous metals, alloy and multi-metals, rubbers and plastics, gaskets and elastomers, ceramics and composites, and many more. Intercept Technology, with its 20 year track record, is still being used worldwide on all seven continents!

With Intercept, you increase the life of your product whether in a controlled or uncontrolled environment.

With Intercept Technology, there is reduction in failures and rejections of your products, there is reduction in wasted packaging, higher thoroughput and increased pack density, lesser man-hours and flexible storage solutions.

Intercept provides packaging of products for conservation all according to your requirements with customized solutions specifically for the fields of engineering, mining, and oil and gas extraction.

In the Philippines, Intercept Technology has product custom converting in Subic Bay, Clark Pampanga with an office in Angeles.

Under the leadership of Ian Read, Intercept is well positioned to take advantage of this fast growing region. Intercept Philippines is well placed to service industries such as electronics including semi-conductors to large industrial manufacturing opportunities including energy, automotive and mining.

Store and safely ship your products with Intercept Technology and never worry about corrosion ever again.

50 Philippine Resources

November 2013 - January 2014

www.philippine-resources.com

At Weatherford “safety is top priority”

T

different clients mainly from industries of oil, gas and geothermal energy.

The core product lines for Weatherford Philippines are tubular running services (running pipes and casings); fishing services; rental tools (grading tools) and jars. Weatherford Philippines is aligned to the global effort of implementing the Eight GEMS program together with the Four Tenets.

hese days, safety is something most of us take for granted. Take driving for instance. We are often reminded that it is safer to be on the defensive rather than the offensive side of driving.

In Weatherford our CEO, Bernard J.Duroc-Danner articulated it best, “If we are not obsessive about quality, if we are not obsessive about safety, we will not be in business. I am certain of it.”

Weatherford is one of the largest multinational oilfield services companies. Its product and service portfolio spans the life cycle of the well—formation evaluation, well construction, completion and production—and provides inventive solutions, technology and services for the oil and gas industry.

Weatherford operates in more than 100 countries and employs more than 65,000 people worldwide with a robust research and development effort, positioned to meet the ever-evolving needs of the oil and gas industry.

Weatherford is an organization that has implemented the Eight GEMS (Getting Everyone Managing Safety) program to ensure that emphasis on safety excellence is exhibited throughout every level of the organization. A Safety Leadership Council of senior leaders has also been

Weatherford Country Manager, Vladimir Kotovsky. formed as part of on going commitment to safety.

Through the Eight GEMS program, Weatherford’s 2012 safety performance was the best ever with real improvement over previous years. There was significant reductions in total recordable incidents, lost time incidents and preventable vehicle incidents in 2012, even while man hours increased 16% to 210 million.

Weatherford Philippines and also all other Weatherford operations across Asia Pacific works closely with both national oil companies and also international oil companies.

“With Weatherford equipment being user-friendly, there is little to no chance for injury” assures Business Development Coordinator Victor Po on Weatherford products. Though Weatherford adheres to such high safety and product standards, they never gamble such chances.

Safety all important

The company’s Four Environmental Tenets program is dedicated to protecting and enhancing the environments in which we operate and live by managing the environmental footprint of our operations in a sustainable manner.

Weatherford Philippines has been up and running since 2009. To date, Weatherford services in the Philippines span across

Weatherford Operations Coordinator Martin Cook, adds “No activity is so important that we cannot take the time to do it safely.”

Cook maintains that no matter how busy they are, they are still adamant in risk management “quality and safety go hand in hand” he adds.

When it comes to reading the Philippine Market, it is best to get the right operators in. Weatherford Country Manager, and a man of a few words, Vladimir Kotovsky says that Weatherford Philippines is certainly “growing”. There is definitely a lot in store in the future for Weatherford.

Aside from providing an extensive and specialized product line, Weatherford also provides the skilled manpower and trained specialists that go with the job.

Safety and excellence you ask? Weatherford breathes and lives it everyday.

52 Philippine Resources

November 2013 - January 2014

www.philippine-resources.com

Mythbusters: Your Self-Assessment Guide to the Latest Aussie Tax Rules...

by Dave Powell CTA, M.Tax, SSA, CFP

O

ne of the saddest things about ex-pat Aussies is their lack of accurate information about their tax options. Nobody’s advocating tax avoidance, and we can all be proud of the high level of public service and civic pride in our country.

But what’s fair is fair, and we should all pay what we should, not a penny more or less.

My professional responsibility as a tax consultant is to define that exact point of fairness, so that neither state nor taxpayer is greedy or exploited.

Partly to illuminate common misunderstandings and identify areas that might require some attention.

I’ve created this light-hearted but accurate self-assessment to find our your level of awareness of current tax rules.

This is a moving target, especially with the recent change in government.

I hope you find this “tongue in cheek” quick test enjoyable and illuminating:

TAKE THE TEST...

Categorise each statement as... (F) False, (T) True or (P) Please don’t let it be true

1) Paying tax builds character.

2) Australians do not pay tax when they die.

3) Superannuation is the best investment a person can make in their lifetime.

4) Spending 183 days in Australia is all that determines residency.

5) On death Superannuation passes tax/trouble free to your family.

6) Assets bought before 19/9/1985 are not liable to Capital Gains Tax. 7) Residents and non-residents pay the same Capital Gains Tax. 8) Owning a house in Australia always makes you a resident.

9) I pay Capital Gains Tax even if I never rent out my home.

10) Australian investors in offshore investments will be fined and jailed.

11) As a trustee of a Self-Managed Super Fund living offshore, I will never fail the residency test and will never have to pay half my life savings in tax.

12) I must leave my Superannuation in Australia till I die.

13) If I’m non resident when I die and leave my condo to my life partner in the Philippines my family in Australia will not have to pay the Capital Gains Tax.

TOTAL (Score 1 for F’s, 2 for T’s, 3 for P’s): HOW DID YOU SCORE? For every “F” score 1, for every “T” score 2 and for every “P” score 3.

If you scored under 15: Tax Guru! We want to pay you $200,000 a year into an offshore bank account and employ you!

If you scored 16-20: Call us immediately - you may have some serious tax problems to address: remember “Hope is not a Strategy”!

If you scored 21 or more: Always carry your “Run Bag” (containing at least 2 passports, multiple currencies and two packs of Winnie Blues!

I hope that you found this amusing and interesting. It’s also very serious to you and your family’s wellbeing.

Questions or concerns? Please contact me on david.powell@sinclairjames.com.

54 Philippine Resources

November 2013 - January 2014

www.philippine-resources.com

Mine Safety Association has a long and proud history

I

n 1938, a core of eight major gold mines, namely Benguet Consolidated Mining Corporation (now Benguet Corporation), Itogon Mining Company, Suyoc Consolidated, Balatoc Mining Company, Cal-Horr, Demonstration Gold Mines, Ltd., Baguio Gold Mining Company and Atok Big-Wedge Mining Company, all located in Baguio Mining District, decided to organize the Baguio Mine Operations Safety Association.

Its main objective is to promote the doctrine of Safety for the preservation and conservation of lives and properties in the mining, quarrying, metallurgical and allied industries.

In 1939, the association kicked off the observance of the 1st Annual Mine Safety Conference in Baguio City. The celebration featured the competition of field events such as mine rescue, timbering, hand drilling and hand mucking.

The events were participated in by selected technical men as well as the rank and file employees in the mine. To enliven the affair, sports activities were also introduced.

The association then perceived that having such activities will serve as a vehicle to foster camaraderie among mine workers and stimulate collective efforts to in-

Safety field competition during the 59th Annual National Mine Safety and Environment Conference in Baguio City to showcase the accident and disaster preparedness of mining companies

56 Philippine Resources

still safety consciousness between mine management and labour. This marked the start of the holding of the field safety competition which was interrupted only by the outbreak of the Second World War. In 1953, after a long hiatus, the first post war national mine safety and accident conference with similar activities was held anew in Baguio City. Since then, the affair was religiously followed every year for about 10 years until the association felt that the field competition should be made a biennial activity.

In between these conferences, mining, metallurgical and geological symposia were held in Manila which included the usual awarding of prizes/trophies to the safest mines and mine’s best personalities.

Vice President and concurrent Chairman of the Awards Committee. From thereon, the Association was able to continue its goals and mission despite several crises encountered by the mining industry.

A testament to this was the significant decline of incidence of mine accidents since the ‘80s.

In 1996, another milestone was made by the Association, with the intercession of the Mines and Geosciences Bureau, when it declared through a Board Resolution, to expand further its mission to include the promotion of environmental awareness.

The added focus on the environment was undertaken to underscore the government and societal industry’s response to the needs and demands of the governContinued on opposite page >

For the purpose of the awarding of trophies, the safest mines were categorized into underground, surface, quarry, cement plant, combined operations, concentrator and most improved safety record. The winners of the mine’s best personalities were determined by manhours worked without lost-time accident for a given period.

Pursuant to Presidential Proclamation No. 115-A dated 17 November 1967.

Signed by the former President Ferdinand E. Marcos, declaring the year nineteen hundred and sixty seven and every year thereafter as the Safety and Accident Prevention Year, the Bureau of Mines, in collaboration with the mining industry, organized the Philippine Mine Safety Association (PMSA) in the same year. The PMSA became the successor of the Baguio Mine Operations Safety Association.

The Association is constituted with the annual election of the Board of Directors in which the Director of Mines and Geosciences by tradition is elected as

Pusong Minero teams from Apex Mining Co., Inc., Philex Mining Corp. and Philsaga Mining Corp. conducted search, rescue and retrieval operations in Pantukan, Compostela Valley

November 2013- January 2014

www.philippine-resources.com

< Continued from opposite page ment and the communities. This also led to the renaming of the association to the Philippine Mine Safety and Environment Association (PMSEA).

PMSEA is a public-private organization composed of the DENR-Mines and Geosciences Bureau, mining companies, quarries, cement plants, suppliers, contractors and other professional organizations.

Its vision is to be the forerunner in the promotion of occupational safety and health, environmental protection and social development (S.H.E.S.) in the minerals industry. It was also during the said year that the Best Mining Forest Contest initiated by the Department of Environment and Natural Resources since 1988 was made an integral part of the activity of the Association.

In 1997, the Presidential Mineral Indus-

try Environmental Awards was formally launched by President Fidel V. Ramos.

The award system was conceived in response to the Revised Implementing Rules and Regulations of Republic Act No. 7942 otherwise known as the Philippine Mining Act of 1995 which put premium on the axiom that mining shall be pro-environment and pro-people in sustaining wealth creation and improved quality of life and that mining shall be managed in an environmentally responsible manner to achieve the maintenance of sustainable conditions at every stage of mining operations as well as the establishment of a functional post-disturbance land use capability.

As an industry association concerned with the environment, as well as health and safety, the PMSA again commits itself in full cooperation and support in the undertakings of the Awards.

On September 4, 2003, PMSEA launched

PMSEA Pusong Minero Teams recover another body at landslide at Brgy. Solongon, La Libertad, Negros Oriental. Pusong Minero search and rescue teams from PMSEA member companies conducted retrieval operations at most devastated areas in Negros Oriental after the 6.9 magnitude earthquake hit the province.

Continued on following page >

Philippine Resources 57

November 2013 - January 2014

www.philippine-resources.com

David Brown Gear Expands Philippines Service Offering

D

avid Brown Gear Industries has announced the recent addition of a new enhanced range of risk management services available to the Philippine market.

With the introduction of their enhanced Condition Monitoring service, David Brown now provide a service designed to relieve customers of the concerns associated with proper long term management and maintenance of gears and gearboxes by providing a set of services (laser alignment, oil analysis, vibration analysis, temperature measurements) and reporting that allows for timely analysis and forward planning of service requirements, before problems surface.

One key technology for assessing and establishing the proper operating conditions for gear systems is Laser Alignment. This precise system allows for alleviation of a vast array of problems which can arise from misaligned equipment. With the addition of latest technology equipment, in the hands of David Brown engineers with extensive experience in its proper use, these problems can be a thing of the past.

Condition Monitoring Services are provided from David Brown’s service facility located within Subic Bay to provide rapid response and ready access to high quality gear services.

The service centre is operated under the hands-on supervision and management

of specialist David Brown gear service engineers out of Australia, Singapore and the UK, complemented by skilled DBGI trained local engineers. The company works in close coordination with client’s engineering & technical staff, working as a team to provide solutions to critical gearbox problems.

Due to the high quality of goods and services provided by David Brown, they also now offer a three year warranty on new gears and gear boxes, as well as on major gearbox refurbishment. This provides customers the assurance they need that they can rely on the goods and services for their mission critical components.

Continued on page 60>

The most dramatic achievement SNAP miners have done so far is the rescue of four people who were trapped for 11 days inside the collapsed Repador Building which was buried in the mudslides in Real, Quezon in 2004.

Some of PMSEA’s environmental programs include the Clean-Up of Diliman Creek in partnership with DENR and the Sagip Ilog Pilipinas Movement, and the reforestation and beautification of the Botanical Garden in Baguio City wherein we showcase indigenous and endemic plants.

per Corporation, Philsaga Mining Corporation, Lepanto Consolidated Mining Company, Philex Mining Corporation, Silangan Mindanao Mining Corporation, Apex Mining Corporation, Oceana Gold (Didipio Project), Malaysian Elite Disaster Rescue Foundation, St. Augustine Gold & Copper, King-king Copper & Gold Project, Zambales Mining Alliance (Benguet Nickel Mining Inc. , LNL Archipelago Minerals, Inc. , Eramen Minerals Inc., DMCI Mining Corp., Zambales Diversified Metals Corp.), Land Rover Club of the Philippine (LRCP), Malaysian Elite Disaster Rescue Foundation (MEDRF), ROMAC Group of Companies, GeoProjects Inc., JCI Senate, Kiwanis International, Philippine Institute of Supply Chain Management (PISM), St. Luke’s Medical Hospital (SLMH), Mundipharma Distribution GmbH (Philippine Branch), MGB-DENR, Region 3.

On November 2011, PMSEA expanded the S.N.A.P. and renamed it as the Pusong Minero program. Through the Pusong Minero program, PMSEA aim’s to show the general public that PMSEA has the heart to serve and the heart to save lives by conducting medical missions, scholarships, relief operations, rescue and recov-

The following names are the companies and organizations that spearheaded the rescues and recovery operations with disaster stricken areas such as Real, Quezon; Guinsaugon, Southern Leyte; Benguet; Compostela Valley province; Zambales; and now with the earthquake aftermath in Bohol (not in any order): Carmen Cop-

For those that supported PMSEA in their government projects were the JCI Senate International and Kiwanis International for the National Greening Program.

While Sagip Ilog Pilipinas Movement and Philippine Institute of Supply Management were for the Adopt-An-Estero Program.

<Continued from previous page the Safety Networking Action Program (S.N.A.P.) The SNAP advocates an integrated approach to prevention, preparedness and emergency response to natural and man-made emergencies in support to national government’s disaster and coordination program. It aims to link the trained cadre of emergency response, search and rescue/recovery experts of mineral industry (metallic mines and cement /aggregates) in a more coherent and effective way during times of emergencies and disasters.

58 Philippine Resources

ery operations, providing safe drinking water, and similar activities. Since the launch of Pusong Minero, the teams have been deployed in areas affected by Typhoon Sendong, Typhoon Pablo, Habagat, etc.

PMSEA’s main activity is the Annual National Mine Safety and Environment Conference (ANMSEC) which is held every 3rd week of November or the Mine Safety Week, this year, will be held this coming November 19-22, 2013.

November 2013 - January 2014

www.philippine-resources.com

Deepcore continues to gather mining contract successes

S

pecialist drilling contractor Deepcore Drilling has added to its reptuation as an important service supplier to the Asia Pacific mining sector with a number of recent contract successes.

Since its inception in 2005, the company has steadily became a significant force in the supply of contract drilling services in the Asia Pacific region; with clients like Xstrata, Ok Tedi Mining Limited and Evolution Mining. In the Philippines,

<Continued from page

Deepcore has been contracted by RapuRapu Minerals, Inc. as its drilling partner for its Rapu-Rapu Polymetallic Project.

The company was established in November 2005 after being awarded with the diamond drilling contract at the Stawell Gold Mine of Northgate Minerals (now owned by Crocodile Gold).

Despite being perceived as a relatively new comer in the drilling industry, the companyâ&#x20AC;&#x2122;s management team boasts,

and engineered solutions across the whole mining process, including exploration, extraction, processing, and transportation.

For high quality gear and gearbox design and new product supply, gear audit and inspection/reporting programs, condition monitoring, repair, maintenance and overhaul, the worldâ&#x20AC;&#x2122;s leading Mining Companies and OEM suppliers traditionally turn to David Brown.

David Brown are the largest and oldest specialist gear manufacturer in the world, and are global leaders in the field of gear and gearbox design, gear and gearbox manufacture, gear supply to OEM and aftermarket industrial customers, major gear repair/rebuild/ refurbishment, condition monitoring services and gear and gearbox repair services (all brands of gears and gearboxes).

With the company philosophy that there is no room for compromise on performance or reliability in a world reliant on mined commodities, and gear system failure is not an option, David Brown globally provide tailored gear products and systems, condition monitoring, strategic maintenance and gear management programs 60 Philippine Resources

Philippine Mining Industry clients can take advantage of over 150 years of global experience in the design, manufacture and servicing/repair of mill drive systems, girth gears, agitator/ thickener drives, conveyor drives, stacker reclaimer, shovel and dragline components and drives, crusher and grizzly gear drives etc.

In the Philippines, David Brown Gear Industries service the requirements of all major and emerging mining companies, and provide the full range of new products, and maintenance services required to keep critical units in optimal operational condition.

This includes comprehensive gear and gearbox condition audit/ inspections, with detailed reporting and

collectively, 190 years of experience in the drilling sector both as client and contractor. This wealth of knowledge is further complimented by the specialist skillsets and expertise of its experienced field teams and back-office personnel.

Headquartered in Australia with branches located in the Philippines and Papua New Guinea, the companyâ&#x20AC;&#x2122;s experience ranges from short-hole production drillContinued on opposite page>

recommendations for future required maintenance services. This information is essential for management to be able maintain critical units in optimal operational condition so that targeted production levels can be reliably maintained.

It also allows for cost efficient budget planning and management, as well as procurement planning and scheduling of maintenance, repairs, refurbishment and replacement programs for critical gearboxes.

DBGI undertake gear and gearbox repair work as appropriate, either in situ at the mine site, or at the Service Centre in Subic Bay. David Brown Gear Industries have been active in the very precise and specialized field of gear engineering in the Philippines for over 30 years, primarily in the Mining, Power, Cement, Sugar, General Industrial, Construction and associated industries. The company have specialist engineers in the Philippines at most times to manage their major projects here in conjunction with David Brown trained Philippine gear service engineers, and are experienced and well qualified to provide world best practice solutions, and complete projects to the full satisfaction of Philippine Mining Industry clients.

Supply Resources 2013-- January 2014 November 2011 2012

www.philippine-resources.com

Monark boosts support for mining Brunel, Site team upISO Deepcoreâ&#x20AC;&#x2122;s management has9-* ensured that Works Deepcore is currently undertaking 43&70 9-* 841* &9*75.11&7

89&'1.8-*) .3 +4:3)& <Continued from opposite page

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)*&1*7 .3 9-* -.1.55.3*8 .8 .3(7*&8.3, .98 8:55479 (&5&'.1 ing to more complex drilling programs .9> +47 9-* 2.3.3, 8*(947 <.9- 9-* *89&' that include holes in excess of 2,000 me1.8-2*39 4+ & 2.3.3, ':8.3*88 :3.9 !-* ters.

Its specializations include: 3*< :3.9 .8 -*&)*) '> 11&3 $&7) &3) *3(425&88*8 89&++ .3 8&1*8 &3) â&#x20AC;˘ Exploration and production drilling; 574):(9 8:55479

43&70 8&>8 9-* 24;* :3)*71.3*8 .98 â&#x20AC;˘ Surface and underground; 7*(4,3.9.43 4+ ;*7> ':11.8- 57485*(98 +47 2.3.3, &2.)89 +&;47&'1* 2*9&1 57.(*8 &3) â&#x20AC;˘ Diamond and Reverse Circulation; A& ;*7> -.,- .39*7*89 .3 .3;*892*398 .3 9-* 2.3.3, .3):897> C .3 57*5&7&9.43 +47 A*= â&#x20AC;˘ Deep holes â&#x20AC;&#x201C; core to 2000m; 543*39.&1 ,74<9- .3 9-* 2.3.3, 8*(947 C

!-* (425&3> 8**8 9-* :3.9 &8 A& 43* â&#x20AC;˘ drilling 94 achieving 8945 Directional 8-45 )*9*72.3*) 574;.)* multi14>&1 ple targets from a single collar; 8:55479 <.9- 9-* 4'/*(9.;* 4+ *89&'1.8-.3, & )**5*7 7*1&9.438-.5 '*9<**3 43&70 â&#x20AC;˘ Drill program planning, design and &3) .98 2.3.3, (:8942*78 C implementation;

!-* &9*75.11&7 )*&1*7 .8 &184 897*3,9-*3.3, .98 &(9.;.9.*8 .3 89&++ 97&.3 â&#x20AC;˘ High pressure de-watering; .3, <.9- .98 43&70 4:3)&9.43 389.9:9* <-.(- 4++*78 >4:3, .1.5.348 /4' 45547 â&#x20AC;˘ Pilot'> Holes.

9:3.9.*8 574;.).3, 9-*2 <.9- 034<1 *),* 80.118 &3) ;&1:*8

safety is the companyâ&#x20AC;&#x2122;s priority.

9.43 -&8 *;41;*) +742 highest /:89 574;.).3, At Deepcore,+47 safety is governed by its 9*(-3.(.&38 43&70 6:.52*39 94 four (4) Pâ&#x20AC;&#x2122;s: safe People, safe Plant, safe 574;.).3, 9*(-3.(.&38 94 .98 14(&1 .3):8 Places, and safe Processes. 4<*7 4<*7 97> 5&793*78 B .3(1:).3, 8.& &1*4 6:.52*39 &3) *9&18 This comprehensive approach aids in

9 8&>8 9-* 5&793*78-.58 <.9- 9-*8* preventing and maximizing (425&3.*8 loss -&;* time 574;.)*) /4' 45547 productivity.

The company 8(-41&78 also has its 9:3.9.*8 94

+4:3)&9.43 &8 own accredited Registered <*11 independently &8 '4489.3, 9-*.7 2&354<*7 7* Training Organization (RTO) that spear6:.7*2*398 .3 9-* +.*1) 4+ -*&;> *6:.5 heads the safety training and programs of 2*39 2&.39*3&3(* Deepcore.

$.9- .98 A!*(-3.(.&3 +47 9-* $471) 74/*(9 C !-* +4:3)&9.43 574):(*8 Aside from these, the company also ac9*(-3.(.&38 +47 43&70 6:.52*39 &3) knowledges environmental considera49-*7 ! )*&1*78 &74:3) 9-* <471) tions arising from its activities.

9 :8*8 9-* &9*75.11&7 &557*39.(* 8*7 ;.(* 9*(-3.(.&38 97&.3.3, 574,7&2 &3) Innovative solutions such as noise-damp&551.*8 &9*75.11&7 &88*882*39 94418 ening acoustic sheds have been enforced &3) 1*&73.3, 89&3)&7)8 94 *38:7* 9-&9 by the company in some environmentally ,7&):&9*8 4+ 9-* 574,7&2 -&;* 9-* sensitive to help its cus7*6:.7*) areas 80.118 in94 order '*(42* &9*75.11&7 tomers successfully carry2.3.3, out their.3):8 drill9*(-3.(.&38 94 8:55479 ing programs.

97> ,74<9- 349 431> .3 9-* -.1.55.3*8 ':9 &184 4;*78*&8 â&#x2013;

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accreditation for Safety, and En-* 7:3*1 ,74:5 Systems -&8 9*&2*) :5 vironment, a process that will (425&3> entrench <.9- 9-* :897&1.& '&8*) the existing procedures and ensure these .9* $4708 .3 & 897&9*,.( &11.&3(* high standards are used throughout all !-* 5&.7 <.11 )*1.;*7 (4251.&3(* *):(&9.43 existing and &3) !7&)* 88*882*39 +47 9-* future operations. !

:897&1.&3 &3) .39*73&9.43&1 2&70*98 &8 Deepcoreâ&#x20AC;&#x2122;s specially designed multi- <*11 &8 97&)* :5 80.11.3, &3) ! purpose rigs are customized, prior to its 94 .39*73&9.43&1 (*79.+.(&9.43 +47 9-* -.1.5 arrival on site, to address site specific 5.3* )42*89.( 2&70*9 and any unique customer re conditions .9* $4708 <.11 :9.1.?* .98 1&70 ):(& quirements. Enhancements to equipment 9.43 .9> (&25:8 .3 1&70 3479- 4+ &3.1& design and & construction is also being 94 )*;*145 <471) (1&88 *):(&9.43 (:7 undertaken by the company in order to 7.(:1:2 )*8.,3*) 94 85*(.+.( (1.*39 7*6:.7* maximize safety and increase rig mobil2*398 +47 9-* 438-47* &3) 4++8-47* 4.1 &3) ity, availability and drilling effectiveness ,&8 2.3.3, &3) *3*7,> 8*(9478 on the,74:5 NSW MDG15 mo and are !-* based 7:3*1 *3(425&88*8 bile plant!*(-3.(&1 standard. *7;.(*8 -.1.55.3*8 7:3*1 <-.(- .8 1.(*38*) +47 9-* *=5479 4+ Maintenance of equipment is done in a .1.5.34 5*78433*1 &3) 7:3*1 !*(-3.(&1 proactive approach to ensure its safety *7;.(*8 &354<*7 <-.(- .8 & (42 and productivity, through an online &3) and 51.&39 (425&3> +47 9-* *2514>2*39 automated maintenance system.

43 -.7.3, 4+ .1.5.34 5*78433*1 43 '*-&1+ 4+ (1.*398 &8 <*11 &8 & +47*.,3 <470 5*72.9 85438478-.5 5&>7411.3, &3) 7*14(&9.43 â&#x2013;

Philippine Resources 61 49 Philippine Resources

November 2013 - January 2014

www.philippine-resources.com

PowerTrends 2013 concludes with a new height of success

T

he 9th biennial International Exhibition and Conference of PowerTrends, which ran under the theme “Fueling an Upbeat Economy”, was held recently at the SMX Convention Center.

The exhibition featured an extensive profile that represented the entire product range of the power and energy sector from renewable energy, meteorological sensors for wind and solar measurement, power generation, electricity supply, oil & gas exploration, generating set control systems, electrical transmission and communication products, solutions for hybrid power generation, water & thermal oil boilers, power plant products & solutions, and test and measuring instruments, among others.

The exhibition also featured a 200 m2 pavilion of the German Federal Ministry of Economics and Technology which

showcased renewable energy and efficiency technologies “made in Germany”.

Keynote Address at the Conference for Secretary Energy Petilla.

Major sponsors of PowerTrends are the Philippine Department of Energy (DOE) together with Joint Venture partners Shell Philippines Exploration B.V., Chevron Malampaya LLC and PNOC Exploration Corporation for the Malampaya project; Shell Gas and Energy Philippines Corporation, Alstom, Andritz Hydro, and Trans-Asia Oil and Energy Development Corporation.

Speakers and moderators included Assistant Secretary Daniel Ariaso, Sr. of DOE; Assistant Director Irma Exconde of DOE; Mr. Rufino Bomasang, Chairman of PHILCOAL, Otto Energy Philipines, and PhilCarbon; Dr. Francisco L. Viray, President and CEO, Trans-Asia Oil & Energy Development Corp.; Dr. Peter Pembleton, CEO, Carbonerrgy BCS and Director of PhilCarbon; Mr. Stephen Lewis, President, Alstom Taiwan and Vice President of Global Power Sales & Marketing, East Asia; Mr. Eduardo Francisco, President BDO Capital and Investment Corp.; Mr. Sebastian Quiniones, Managing Director, Shell Philippines Exploration B.V.; Mr. Roger Buendia, First Vice President Trading and Marketing, Aboitiz Power; Atty. Cyril Del Callar, Managing Partner, Del Callar Partners Co.; Atty. Jose M. Layug Jr., Senior Partner, Puno & Puno Law Offices; Mr. Roberto Almazora, SVP and Head of MPOWER, MERALCO; Atty. Elmer Nonnatus A. Cadano, Corporate Secretary, Power Sector Assets & Liabilities Management; Atty. Francisco S. Villa Jr., Planning and Information Services Director, Energy Regulatory Commission; Mr. J. Scott Porter, Senior Business Development Manager, Shell Eastern Petroleum Pte Ltd.; Mr. Peter Gnos, Market Management Ocean Kinetics, ANDRITZ Hydro GmbH; Mr. Steffen Scudio, Head of Sales for Smart Generation Solutions, Siemens AG, Germany.

The concurrent Powertech Business Forum promoted a platform to establish business partnerships and uncovered potential opportunities in various aspects of energy development and power generation.

PowerTrends 2013 was officially opened

by Department of Energy Undersecretary Loreta Ayson who also delivered the

POWERTRENDS recently held its 9th biennial International Exhibition and Conference which ran under the theme “Fueling an Upbeat Economy” at the SMX Convention Center. Together with DOE Undersecretary Loreta Ayson, who officially opened the exhibition, are VIPs and Sponsors (from left to right) Mr. Albin Koenigshofer Andritz Hydro General Manager, Mr. Ho Vooi-Toc Alstom General Manager, Ms. Cecilia Sanchez Leverage International CEO, Mr. Volker Hauck of German Federal Ministry of Economics and Technology, USec. Loreta Ayson of DOE, Mr. Sebastian Quiniones, Managing Director of Shell Philippines Exploration B.V. (On behalf of Malampaya joint venture partners Chevron Malampaya LLC and PNOC EC), and Mr. J. Scott Porter Senior Business Development Manager, Shell Eastern Petroleum Pte Ltd, representing Shell Gas and Energy Phils. Corp.

62 Philippine Resources

Organized by Leverage International in cooperation with the Department of Energy, the event enjoyed industry support from the Independent Power Producers Forum (IPPF), UK Trade and Investment (UKTI), German-Philippines Chamber of Commerce and Industry, Inc., European Chamber of Commerce of the Philippines, Renewable Energy Association of the Philippines, and Philippine Independent Power Producers Association Inc.

November 2013- January 2014

www.philippine-resources.com

Proposal raised for additional five percent excise tax on mining

T

he Mines and Geosciences Bureau (MGB) has revived a proposal to impose an additional five percent excise tax on gross mining revenue on top of the prevailing two percent so as to assure government of increased tax collection.

In a comment on the draft Philippine Mining Revenue Sharing Arrangement Act of 2013, MGB raised the position that the additional five percent tax on the gross sale of mining production be imposed on both mineral and non-mineral reservation areas.

“We are proposing to just implement the present fiscal tax regime, but less the incentives plus five percent of the gross sale as royalty payment, “ said MGB Director Leo L. Jasareno in a letter to Board of Investments-Resource Base Industries Director Nestor P. Arcansalin.

The mining revenue sharing agreement under the draft bill proposed a 10 percent tax on gross production value or 50 percent on gross income, whichever is higher.

Lower Government take However, at this tax structure, revenue for government will be lower than the existing tax payments of mining contractors, according to the MGB. For instance, in 2011, total taxes paid by mining contractors amounted to P22.2 billion. This was 13.6 percent of gross production value totaling to P163.2 billion.

“Considering that the proposed draft bill is inclusive of all taxes and royalties, except real property tax, the more the government take will be lower,” Jasareno said.

Usual taxes slapped on contractors include corporate income tax, excise tax, business tax, royalty payments for indigenous cultural communities, and royalty of minerals and mineral products extracted from mineral reservations.

Philippine Resources 63

November 2013 - January 2014

www.philippine-resources.com

Are We in a Crisis?

Understanding a Crisis and Staying in Control EON President and COO Leana Farrales-Carmona shares insights on how effective crisis communications management can be in turning a crisis into an opportunity to build your brand.

I

magine a scene straight out of a disaster zone. An explosion that destroys assets and maims people— right in your own property. Or a freak accident in a bus line that your company operates. Chaos reigns. Relatives of victims are frantic. The death toll is mounting.

Government is promising to investigate your company. Media is at the disaster site, interviewing everyone from the security guards to bystanders. On Twitter, your company is trending, except that all the tweets are derogatory and blaming you for just about everything that has happened.

Let’s face it, crises happen. Despite your efforts to manage risks by embracing stringent regulations and safeguards, the

possibility of a crisis unfolding remains.

When it breaks, a crisis can do one of two things: it can destroy your company’s reputation, or it can provide an opportunity for you to demonstrate that your company is trustworthy.

Know when you are in a crisis What, exactly, is a crisis? Crises are unforeseeable situations that put your company in a bad light. When attention is focused on your organization, something has to be done immediately. A crisis is different from an issue, which is a long standing matter that usually affects your entire industry, and which can be managed proactively.

In a crisis, TRUST is an institution’s asset that becomes at risk. When people avail of your company’s product or service, they are showing that they trust your brand to deliver intangibles like safety and security.

In EON’s most recent Philippine Trust Index, respondents said that the top three

attributes of trustworthy institutions are consideration for the environment in its decisions and actions; contribution to nation-building; and delivery of quality results.

Effective crisis communications management reinforces a company’s accountability and commitment to its stakeholders and maintains its integrity in the face of adversity.

If acted on responsibly, a crisis can be a platform to strengthen the public’s trust and prove to stakeholders what a company is made of.

Many companies will be badly damaged by a crisis, especially those who have done nothing to engage their stakeholders and gain their trust before disaster struck. Corporate history is littered with the stories of those organizations that never recovered after a disaster.

Yet there are those who have managed to make use of the incident to illustrate that despite their failings, they are a caring and sincere company that is worth supporting.

These exceptions are almost always those companies who have an honest understanding of their risk areas, have undertaken steps to mitigate these, and have a plan for when things go wrong.

Prepare for a Crisis Crises typically go through three stages: the pre-crisis stage when issues which are unresolved abound; the crisis proper, which covers its outbreak up to management and mitigation; and post-crisis, which is when efforts are undertaken to restore damaged reputation and do a Continued on page 64>

64 Philippine Resources

November 2013 - January 2014

www.philippine-resources.com

< Continued from page 64 thorough evaluation.

Companies that manage well during a crisis are those who have done the most work during the pre-crisis stage, which is a time of extensive preparation.

How exactly should a company prepare for a crisis?

It begins with knowing more about your own company. Ask yourself the following questions: •

Do we have protocols?

•

Do we have a crisis manual? Is it known to the people on the ground?

•

Who is our spokesperson?

•

Do we have media relations personnel (or an agency) that can be deployed on site immediately?

As you address these questions, constitute a crisis team that can be activated if and when a crisis occurs. Identify the person who will speak on behalf of the company during a crisis. You wouldn’t want your security guard answering journalists when a crisis happens.

resentative who is used to communications, has familiarity with the press and their tendencies, is sympathetic and is media trained.

Try not to appoint lawyers and CEOs to be your spokesman. Then simulate crisis situations, holding drills especially with frontliners. Once the crisis breaks out, your company should automatically go into execution mode.

Be Involved and Stay Connected Building your reputation is a means of preparing your company to withstand issues and crises that may challenge the strength of your brand. Remember to be involved. Position yourself as a thought leader, by contributing to research. Participate in credible discussions with peers in industry events on issues of the day.

Spearhead events that people value and remember, such as excellence awards.

Be a good corporate citizen and be actively involved in community initiatives. All these could give you a measure of goodwill in your stakeholders’ eyes which could go a long way when disaster strikes.

Stay connected—social media is your friend. Embrace it and use it as a tool

to stay current and get in the discussion. Crises happen in a flash and often the best way to stay on top of it is social media. As long as you have the proper protocols, messaging, and spokesperson, social media can be an asset to your business, especially in a crisis, rather than a threat.

Be the Source of Clarity Remember that during a crisis, your company will have to be in control to manage the situation and eliminate anxiety and panic. You will have to be the first and only source of information, and should establish your credibility as a news source. Communication is 50% of the crisis management process. Speed up the resolution of the crisis and make sure that you convey genuine empathy with those affected. Address facts and sentiments equally. You will have to gain the trust of the public as the crisis runs its course.

Needless to say, you will ride out the storm in better shape if you have invested in creating trust-based relationships with your stakeholders. Your company may not be able to do this overnight, but if you would find ways to be proactive about it, you would give your company a shield that should prove most useful when crises occur.

A good spokesperson is a company rep-

Outotec lands PASAR smelter contract

O

utotec has been awarded a contract by Philippine Associated Smelting and Refining Company (PASAR) for the modernization of PASAR’s copper smelter in the Philippines. The contract value exceeds EUR 12 million and it has been booked in Outotec’s third quarter order intake.

PASAR’s copper smelter is based on Outotec Flash Smelting technology. The original Outotec Flash Smelting license dates all the way back to 1977. Over the years PASAR has regularly upgraded the smelter together with Outotec.

Outotec’s scope of modernization work this time includes equipment deliveries such as modern proprietary concentrate feeding system and burner, process advisor, furnace cooling system and anode casting shop including the supervision services.

“PASAR and Outotec long-term relationship is a good example how the smelting technology can evolve by working together. By renovating and upgrading the older generation smelting plants with latest technology developments and our rebuild services, our customers can meet the increasing efficiency and environmental requirements and ensure their competitiveness far in the future”, notes Robin Lindahl, head of Outotec’s Metals, Energy & Water businesses.

66 Philippine Resources

August - October 2013

November 2013- January 2014

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www.philippine-resources.com

The future of Philippines CRM outsourcing years. As Mr. Manny Pangilinan declared space where womenmarket could share their

< Continued from page 52

PR: What are the challenges you faced while working on DIWATA? he Philippines continues to be one

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of the most attractive destinations DDA: for While challengesfuelled are numerous, outsourcing, largely by Icompetitive take them price as opportunities.

So long points and significant as you know your subject well, I don’t pools of labour with English language think you will see them as challenges.

Of skills, according to Ovum. course, you have to respect the opinion of others so we encourage dialogues.

New research focused on CRM suppliThe Philippines is so richly endowed.

You ers in the Philippines found potential will see the proof of it byassimply going to and the within industry a non-voice Ayala museum to see how the country is non-English-speaking delivery center. gifted with both natural and human reFurthermore, as the country’s economy sources. continues to expand, outsourcers will see greater opportunities to serve the increasCertainly, the environment to be ingly sophisticated domesticneeds market. protected. Today’s technology has given the industryour thevisit possibility to extract “Following to the country and responsibly.

Also, I am very our on-the-ground research, itconcerned is clear to with poverty in this country.

It isone mind us that the Philippines will remain of boggling how this country has so much the powerhouses among offshore frontpoverty. office outsourcing destinations,” says Margaret Goldberg, associate analyst, IT IfServices you go atout thereand in the countryside, Ovum co-author of the things have not changed for the past report. She adds “The combination of a

“poverty, not mining, is the problem”.

There are many issues to addresstowards but as significant cultural disposition Fr. Bernas said “whatever you say about customer service and affinity to Western mining, even the constitution provides cultures, strong English language capafor it”. and I thought that was significant bilities competitive pricea points will statement. ensure that the outsourcing industry in

the country will continue to see strong PR: How your help catapult DIgrowth fordid years to role come.”

WATA? The outsourced contact center market in DDA: The is Minerals Development the Philippines among the most robust Council which I initiated was in the world. “Specifically, in we2005 anticipate representing the public sector.

My idea an increase from just over 117,000 agent was to bring these two sectors positions (APs) to nearly 173,000together APs by so that there is a common the end of 2017. We also understanding anticipate anof what the problems and a common nual growth in agentare positions will be understanding of how to address them. roughly 10 percent through this period, As a diplomat, I always opted for learned which is significantly higher than the dialogue. global growth of approximately 5 percent year-on-year during this period,” comWhen I say learned, I mean that both ments Goldberg. parties who sit at the table are fully prepared and aim to reveals find solutions to comThe report also that the largmon problems.

Based on my experience, est vertical markets serviced by contact Icenter thought of continuing use of public outsourcers in thethe Philippines are

constructive ideas hence, Diwata.

financial services and communications, a PR: can an ordinary citizen your trendHow anticipated to continue forhelp the next cause? five years. Smaller vertical markets are forecast to have marginal increases in DDA: Study thetohistory this country.

APs dedicated sectorsofsuch as retail Study the geology of this country.The and travel & tourism, which are driven by way I see it, there isspending a need as forWestern educagrowth in consumer tion, for the Filipinos to get to know economies improve. the country better. I’ve had a continuing educational “From an experience. outsourced There contactis always center something new to learn, and perspective, the Philippinesthis is country heavily has a very toward rich history, an exciting geogweighted offshore delivery. apraphy and geology.

Knowing the country proximately 10 percent of outsourced well reallyis inspires to find way on capacity currentlyyou devoted to adomestic what role you can play in the larger picwork. ture. There is no role or job too small or too youanticipated really wanttotoshift contribute “Thisbigisifnot signifior “give back” to the country. cantly over the next five years. However, should the Philippines consumer PR: those that growth are not in with minspaceForexperience intune volumes and ing, how can DIWATA educate others on its sophistication, these proportions could advocacies? change markedly, and outsourcers need to watch this space closely to prepare for Continued on page such an eventuality,” Goldberg said. 56>

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54 Philippine Resources

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Philippine Resources part of the community Advertisers’ Index Aden 19 AECOM 39 Antrack Philippines

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PNG Trainees To Learn Vital Skills at SITE’s Clark Campus

33

Austhai 55

Hansa Mayer

November 2013 - January 2014

www.philippine-resources.com

OBC 3

O

rion Project Services PNG (part of the Orion Group) has announced the signing of an agreement for an innovative training pilot program developed in collaboration with the Ipatas Foundation and SITE Group International Limited.

The agreement will provide residential training for 120 PNG nationals from the Enga Province in areas of Heavy Diesel Maintenance, Construction and Fabrication as well as Camp Services, Cookery and Logistics at SITE Skills Clark, Philippines campus.

The candidates will undertake intensive long term training commencing with up to 6 months live-in training before being deployed with a selected employer for further on-the job training (OJT).

The program will target areas of skills shortage in PNG with a goal of training locals to reduce the national dependence on imported (expat) labour. The pilot group will also undertake leadership training as future leaders in their field.

“This pilot program is designed to provide training that is tied to outcomes – employment,” Chairman of Ipatas Foundation, Isaac Lupari, said.

“Too many of our people have not had the opportunity to participate in the major projects in this country and we are endeavouring to rectify that by sustainable long term training programs tied to employment. As a country we must ensure that the opportunities are shared but without pre-requisite skills this is difficult. In this program, we believe we can provide a solution.”

At a signing ceremony including the Grand Chief and Governor for Enga ,Governor Ipatas stated, “It’s time for us to look beyond the trades training we have embarked on and develop a program that is tied to employers. We will be expecting employers to join us in this venture. Already we have had significant commitment from the mining, oil and gas and construction sectors.”

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SMEC 17 Surtech 67 68 Philippine Resources

Allen Tyson, Regional Director of Orion, said the landmark initiative is building on his company’s many years of successful provision of competent resources in PNG, and its continued commitment to sustainable development of the indigenous labour pool.

“We view this project as the forerunner of several , which will in time be facilitated in PNG.” SITE CEO and Managing Director Vernon Wills said the strategic step by Ipatas, strongly supported by Orion, provides a path of certainty for PNG nationals to gain the necessary skills to participate in the construction and operation of PNG projects.

The pilot K4.5 million will be delivered by Orion and SITE at SITE’s Philippines Training Facility, situated at Clark. First candidates are expected to have progressed to paid OJT by January 2014.