Issue3-2012 by angie abeleda

Philippine Resources Mining, Petroleum & Energy Journal Issue 3 2012, August - October

Philippinesâ&#x20AC;&#x2122; Golden Future

EO 79 Puts Mining in the Limelight

Women Have Their Say

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Contents August - October 2012

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Headlines in this issue Front cover photo shows a typical gold pour. While the Philippinesâ&#x20AC;&#x2122; gold production has fallen significantly this year , a string of new projects is expected to help turn that around.

Resources Commentary

Legislative Initiatives Poised to Make Life More Difficult for Mineral Explorationists

An Afternoon Well Spent: A Dialogue with IPs and Women on EO79

Industry welcomes signing of new mining order

Infrastructure Investment 22

ADB pours US$625 million into infrastructure support

Mineral Resources 24

Nickel the rising star for Philippines Mining

Masbate provides CGA with strong quarter

4 Philippine Resources

Oil & Gas Resources

Gas2Grid ready to start Cebu drilling campaign

Otto Energy has a busy schedule ahead of it

Site wins Shell training work

Shell confirms commitment to Philippines with major LNG plans

Total farms into Block SC56

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Resources Viewpoint August - October 2012

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Philippine Resources Mining, Petroleum & Energy Journal Issue 3 2012 August - October 2012

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 Journalist/Marketing Steve Hill steve@philippine-resources.com +63 918 669 8611 Editor Colin Sandell-Hay Sales and Marketing Cecilia Pamular +63 920 967 8342 Design/Production Elizabeth Galura 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

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6 Philippine Resources

Executive Order 79 Receives Good Support

ny mining or oil and gas company executive will tell you that when it comes to legislation the one thing they really want is certainty.

They would much prefer difficult legislation if they know what it is and that it is not going to change dramatically for the worse, than dealing with unknown or constantly changing policies. That is why the majority of the mining sector has welcomed Executive Order (EO) 79 that was recently signed by President Benigno Aquino III. The Chamber of Mines of the Philippines (COMP) described the Mining Policy as a “signal to all investors of government’s desire to establish a consistent and stable business environment founded on a level playing field. “We are hopeful that the policy will harmonize conflicting interests, encourage investments, and foster sustainable development, especially in the countryside where it is greatly needed,” the Chamber added. Leading business body, the Philippine Chamber of Commerce and Industry, also welcomed the signing of EO 79. “The good thing about the policy is that it’s applicable to all. So we see it in a positive side,” PCCI president, Miguel Varela, said. XXXXXX The Philippines oil and gas sector is set for a surge in activity with Shell committing to major expansions at Malampaya and a number of junior companies having some interesting exploration programs about to start or on the drawing board. There will be plenty of interest in Gas2Grid’s onshore work on Cebu, while Otto and Nido Petroleum are firming up some interesting targets in their offshore areas. Success in any of those areas would provide a welcome boost to the local oil and gas sector.

Resources Commentary August - October 2012

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Legislative Initiatives Poised to Make Life More Difficult for Mineral Explorationists By Fernando Penarroyo For the past few weeks, the mining industry was again in the limelight as the much eagerly anticipated Executive Or-

der (EO) No. 79 was released and the International Monetary Fund (IMF) study on Philippine mining fiscal regime was published. Little did we know that vari-

ous measures affecting the industry were silently being deliberated and passed by the 15th Congress. There were numerous moves in both chambers to repeal the Philippine Mining Act of 1995. In the House of Representatives, Congressmen Lorenzo Tañada III and Kaka Bag-ao, both from the progressive bloc, filed two bills, House Bill (HB) Nos. 206 and 3763 respectively, entitled “An Act to Regulate the Rational Exploration, Development and Utilization of Mineral Resources, and to ensure the Equitable Sharing of Benefits for the State, Indigenous Peoples and Local Communities, and for other Purposes”. Both bills are still pending with the Committee on Natural Resources since 2010. On the other hand, Senator Sergio Osmeña III filed a similar bill in the Senate. Under Senate Bill (SB) No. 3126, mineral resources development, utilization and processing shall be reserved for Filipino citizens and Filipino corporations. On the other hand, exploration shall be exclusively and directly undertaken by the State through the Mines and Geosciences Bureau and cannot be delegated or contracted out to private corporations or persons. Also, Financial or Technical Assistance Agreements, or any other similar agreements, contracts, and/or executive issuances granting license or permission to explore, develop and/or utilize mineral resources shall not be awarded to foreign entities or persons. Exploration activities shall be non-invasive such as seismic, gravity, magnetic, electromagnetic, radar, induced polarization, radio wave and electro-geochemical. Open-pit mining method for the extraction of mineral ores and the sub-

Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law Offices 8 Philippine Resources

Continued on page 10 >

Resources Commentary August - October 2012

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< Continued from page 8 marine tailings disposal method are likewise prohibited. Under Osmeña’s bill, the contractor shall pay at least ten per cent (10%) of the gross revenues as royalty to indigenous cultural communities (ICCs) in case of mineral operations within ancestral domains, the payment of which shall directly be given to the ICCs in a process that build on their traditional and customary laws. Community development programs shall not be considered as royalty payment. In no case shall mining rights under the proposed bill be transferrable and violation of this provision shall cause the cancellation of the agreement and forfeiture of assets and equipment of the contractor in favor of the State. Similarly HB No. 1635 authored by Rep. Maximo Rodriguez, Jr. entitled “An Act Protecting the Rights of Indigenous Peoples Affected by Mining Operations in Ancestral Domains proposes a five percent (5%) royalty based on gross output. The bill is currently pending with the House Committee on National Cultural Communities since 2 August 2010. The House of Representatives passed HB No. 5485 sponsored by Rep. Rufus Rodriguez, which disallows all extractive activities such as, but not limited to, logging and mining in protection forestlands. Under the bill, protection forestlands consist of all mossy and old-growth forests; freshwater, swamps and marshes; all areas along the bank of rivers and streams, and the shores of the seas and lakes throughout their entire length and within a zone of three (3) meters in urban areas, twenty (20) meters in agricultural areas, and forty (40) meters in forest areas. The bill was approved by the House on 13 December 2011 and transmitted to 10 Philippine Resources

and received by the Senate on 15 December 2011. Concurrent with this bill is HB 5860 also authored by Rep Rufus Rodriguez entitled “An Act Providing for the Delineation of the Specific Forest Limits of the Public Domain and for Other Purposes” which was approved by the House on 21 March 2012 and transmitted to and received by the Senate on 26 March 2012.

approved by the House on 16 May 2011 and transmitted to and received by the Senate on 24 May 2011.

In the Senate, Senator Loren Legarda introduced SB No. 1365 calling for an amendment of the Philippine Mining Act of 1995 by giving local government units the right to declare areas in their jurisdiction as no-mining zones.

Relatedly, in the International Monetary Fund (IMF) Report “Philippines: Reform of the Fiscal Regimes for Mining and Petroleum” published on June 12, the IMF recommended that Congress enact a continuous appropriation for the distribution of the share of local government units (LGU), and payments should be made based on estimated amounts with adjustments when final amounts are known to improve the procedures for transferring funds and to foster local support for large-scale mining.

Senator Legarda also introduced SB No. 1359 proposing for the institutionalization of a Philippine Economic Environmental and Natural Resources Accounting (PEENRA) System.

The IMF also recommended that a joint monitoring commission, with national and local representation be introduced to oversee the distribution of revenues to LGUs.

PEENRA framework

The IMF mission was requested by the Philippine government to identify and provide advice on measures that would increase government revenue from the mining sector, but which would not require legislative action.

The PEENRA framework includes accounting for environmental quality and waste disposal services, depreciation of natural capital, and environmental damages. PEENRA aims to generate physical and monetary estimates of the depletion of selected natural resources and the degradation of environmental media arising from selected economic activities. As the economy continues to capitalize on its water, forest, mineral and other natural resources in its quest for higher growth, Sen. Legarda believes that the framework will address concerns as to the physical and monetary impact of this economic growth on the environment. Representative Neptali Gonzales II sponsored HB No. 4410 “An Act Providing for the Direct Remittance to the Host Local Government of its Forty Percent Share (40%) of the Proceeds Derived from the Utilization and Development of National Wealth, amending for the Purpose Section 293 of Republic Act No. 7160 as Amended Otherwise Known as the Local Government Code of 1991”. The bill was

Initially, the proposed measure was to extend the 5 percent mineral royalty, which currently applies only to mines located in mineral reservations, to all mines by way of an administrative order. But the IMF realized that this could be problematic as the precedent used to justify the imposition of royalties explicitly provided only for royalties on minerals produced in mineral reservations. Sen. Ralph G. Recto introduced SB No. 2754 proposing to increase the tax on minerals and quarry resources from two percent (2%) to seven percent (7%). Under the bill the potential revenue from the proposed increased excise tax on mineral products shall be equally divided between the national government Continued on page 14 >

Resources Commentary August - October 2012

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An Afternoon Well Spent: A Dialogue with IPs and Women on EO 79 By Patricia A. O. Bunye

Ince the issuance of Executive Order No. 79, Series of 2012 (“Institutionalizing and Implementing Reforms in the Philippine Mining Sector Providing Policies and Guidelines to Ensure Environmental Protection and Responsible Mining in the Utilization of Mineral Resources”), we have heard a cacophony of voices expressing divergent views on the so-called national mining policy, prompting DENR Secretary Ramon Paje to comment that, since no one group or sector was completely happy or completely unhappy with the EO, it must be a balanced policy. Lost among these voices were those of “special mining stakeholders” – women and indigenous peoples who are among those who stand the most to gain (or lose) in the implementation of EO 79. Recognizing the need to hear the

Patricia A. O. Bunye is a senior partner at Villaraza Cruz Marcelo & Angangco (website www.cvclaw.com). Her areas of specialization are mining and natural resources, power and energy and intellectual property (particularly IP commercialization). She may be reached at po.bunye@cvclaw.com. 12 Philippine Resources

thoughts, feelings and hopes of the women and indigenous peoples, Diwata-Women in Resource Development, Inc. (DIWATA), held a groundbreaking dialogue with them on 30 August 2012 entitled “EO 79: The IPs and Women’s Views”. In the audience were National Commission on Indigenous Peoples (NCIP) Chairman Zenaida-Brigida Pawid; Director Edwin G. Domingo of the Foreign Assisted and Special Projects Office of the DENR; Mines and Geosciences Bureau (MGB) Assistant Director Elmer B. Billedo and Department of Agrarian Reform Undersecretary Rose Bistoyong, as well as representatives from the mining industry, academe and civil society. Indeed, it was a rare opportunity to engage these women and indigenous peoples in a frank no-holds barred discussion that one of the IP panelists described as cathartic after not having sufficient opportunities to tell their story. The tone and context of dialogue were set by the moderator, Atty. Jose Molintas, Member of the Expert Mechanism on the Rights of Indigenous Peoples (EMRIP) of the United Nations Human Rights Council, and an Ibaloi, who underscored that the main concern of IPs is to have their rights to their ancestral domain and self determination, as well as economic development, to be upheld. The IPs are not simply “affected communities”, stressed Atty. Molintas, but the owners of the land who should be treated as partners in development. The resource persons at the dialogue were Bai Dalina Samling, Chieftain of the B’laan in Tampakan, South Cota-

bato; Zenaida Anoy Dandana, Subanon Tribal Leader, Siocon, Zamboanga del Norte; and Nolda Querona of Bataraza, Palawan, all of whom spoke fearlessly and from the heart. Although the resource persons belong to communities that are in different parts of the Philippines, and the mining projects located in their respective areas are run by companies in different stages of development, it was apparent from the stories they shared that their lives prior to the entry of the mining companies were very different from what they are experiencing today. In the case of the B’laan, prior to the entry of Sagittarius Mines, Inc. (SMI) and its predecessor-in-interest, Western Mining Corporation, they had limited means of livelihood; their children could not go to school; health care, particularly prenatal and maternal care, were limited and the sick could not be brought to the hospitals due to the lack of roads. The Subanon leader, Zenaida Anoy Dandana, related a similar experience. She related in their own language that, while she did not have the opportunity to go to school, with the entry of TVI Resource Development (Phils.), Inc. (TVI) into their area, she was able to send her children to school and they are now all professionals and gainfully employed. Her daughter, Gemma Dandana-Tolentino, who acted as her translator, is now a forester who works at TVI. Gemma is part of a team that spearheads the rehabilitation and revegetation of mined-out areas of Canatuan. Continued on page 14 >

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< Continued from page 12 Gemma expressed the Subanons’ gratitude for TVI’s presence in their community, which used to be isolated and unreachable even by government. The Subanons acknowledge that, over the years, TVI has been their partner in developing the community. In the case of Nolda Querona, who hails from Bataraza, Palawan, she revealed that life prior to the entry of Rio Tuba Nickel Mining Corporation (Rio Tuba) had been difficult and they subsisted on cassava and bananas. Malaria, among other illneses, was prevalent. Today, however, even the elderly who were once illiterate are now able to study under TVI’s Indigenous Learning System. The women’s level of empowerment

was evident. Bai Dalina Samling gave credit to SMI’s capability building activities for giving her the confidence in public speaking. They also displayed a good grasp of the technical aspects of the projects, such as on the merits of open pit mining, prompting the moderator to quip that they should be employed by the companies as consultants. While many in the audience were already believers in responsible mining, the personal stories of these women touched them more powerfully than any statistics or documentation could. These women were living testaments of the positive change that responsible mining has brought to their day-to-day lives. Their smiles, fighting words and even tears reflected their gratitude, personal convictions and obvious apprehension over how things may change in future.

All three women expressed their communities’ support for responsible mining and confirmed that the companies in their areas respect them, their ancestral domains and their aspirations. Zenaida Anoy Dandana, speaking through her daughter Gemma, was emphatic that they did not lose their dignity in allowing TVI to operate on their land. In fact, she said, that with the developments brought by TVI, their tribe became one of the most respected. In the past, before TVI came, she recalled that it was the age of illegal small scale mining. During that time, they felt that they had been reduced to slaves and women did not enjoy equal benefits. With all these positive changes in their communities, these women understandably have mixed feelings about EO 79 and are apprehensive about changes that Continued on page 16 >

Continued from page 10 > and the LGUs where the mineral and quarry resources are extracted. In particular, revenues from the three and a half percent (3.5%) tax on minerals shall accrue to the National Treasury, while revenues from the other three and a half percent (3.5%) tax on minerals shall be remitted directly to the LGUs as support for their Special Education Fund. Nevertheless, the IMF admitted that simply extending the royalty to mines outside a mineral reservation or increasing the rate of the mineral excise would increase production-based levies and would make the fiscal regime unattractive for mining projects of low profitability. It has been reported that for the Mining Industry Coordinating Council, (MICC), created and deputized under EO 79 to prepare its implementing rules and regulations, the question of whether or not mining would continue to enjoy incentives depends on the proposed legislation being crafted by the Department of Finance (DOF) to rationalize the revenue and benefit sharing-schemes and incentives given to mining companies. The DOF is also considering inputs from the IMF Report, which recommended among others, the repeal of the Board of Investments and Mining Act tax incentives. As reported, the MICC is inclined to strip prospective mining projects of incentives, a move that has to go through legislation, which the Aquino administration is expected to prioritize the passage of. However until the issue on government share is resolved by the MICC, the question on incentives cannot be tackled. The government cannot take away existing tax incentives given to mining projects but there will be no new incentives for mines opened in the future if Congress strips existing incentives. It appears that the confluence of these legislative and policy measures currently being undertaken by the Philippine government will cause investors in the industry to reevaluate their business strategies and cash flow analyses. As it is, mineral explorationists will face the inevitable task of telling their shareholders if it is worth spending further risk capital on the Philippines or it is time to pack their bags and leave for safer and stable havens. Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law Offices (www.punopenalaw.com). He specializes in Energy and Resources Law, Project Finance and Business Development. ■ 14 Philippine Resources

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< Continued from page 14 may be brought about by its implementation. In the case of the B’laan, while they are pleased that EO 79 demonstrates the national government’s support for mining, and underscores that local ordinances must be consistent with national laws, they continue to face a provincial ordinance banning open-pit mining in South Cotabato. They are bewildered that, simply due to the existence of the said ordinance, the DENR denied SMI’s application for an environmental compliance certificate (ECC) notwithstanding the company’s compliance with all the relevant requirements. The ECC’s denial prevents SMI from proceeding to construction and operation and delays their timetable by at least two years. Bai Dalina Samling sees it as a case of the provincial government trampling on their rights as IPs, particularly the right to self-determination, as their tribe’s

support for the Tampakan Project is vocal and unabashed. She says that it is only because it is not customary for tribe to show their dismay and disapproval over this setback by holding rallies or protest actions that they are not taking to the streets. However, they have made their sentiments known through manifestos which they hope the government will heed. She also called on the government representatives present at the dialogue to help them elevate their pleas all the way up to the President if necessary. In the case of the Subanons and the community in Bataraza, Palawan, they are more concerned about the provisions of EO 79 on the moratorium on new mineral agreements pending the enactment of legislation defining a new revenue sharing regime, as well as the public bidding of mineral agreements which have expired. As TVI and Rio Tuba are already operat-

Who or what is DIWATA?

IWATA is an NGO advocating the responsible development of the Philippines’ wealth in resources. It is offered as a positive and productive platform for the discussion of issues in resource development.

The members of DIWATA are women involved in the different facets of resource development, representing a broad range of disciplines, with each one bringing to the table unique skills, talents and ideas. DIWATA presents a unique voice and perspective. It has a special advocacy for the protection and upliftment of special mining stakeholders, particularly the women and our indigenous people – their livelihood, health, education, and culture. As a result of its 30 August 2012 Dialogue, DIWATA will produce a White Paper to be submitted to the Mining Industry Coordinating Council (MICC), which it hopes will be a valuable input that would be appreciated and considered, not only by the MICC, but by all decision makers of the mining industry. The next Diwata dialogue on Women in the Cordilleras will be on 14 November 2012 during PMSEA’s Annual National Mine Safety and Environment Conference in Baguio City. ■

16 Philippine Resources

ing, the communities in these areas are fearful that the implementation of the said provisions on the moratorium and public bidding would mean, among others, that when their current agreements expire, there is a possibility that new companies would be allowed to operate the mines in their area and that these would not provide the same opportunities to them as the current companies. All three women expressed support and, yes, even love, for the companies that they are currently dealing with. Their apprehensions about any future change center on very basic human needs: education, livelihood, health and peace and order, all of which they expect government to provide, but which are provided instead by the companies, in this case, SMI, TVI and Rio Tuba. They are one in the belief that responsible mining will sustain them, and are incredulous over how some unscrupulous groups claim to represent them and express opposition to the projects. Bai Dalina Samling says that the “datus”, anti-mining NGOs and church groups who claim to speak for them are all outsiders. She is adamant that it is her tribe living on their ancestral domain and the mine site, and therefore they know what is best for them. Zenaida Anoy Dandana and Nolda Querona joined her in inviting the audience to come and visit them to see for themselves the development that has flourished in their areas. Not all mining is destructive, they declared, adding that God would not have given them bountiful mineral resources if He did not intend them to be utilized.■

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Resources Legislation Commentary Training August - October 2012

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Industry welcomes signing of new mining order

he Philippines resources sector has welcomed the opportunity for increased certainty provided by the recent signing of a new mining policy. The Chamber of Mines of the Philippines (COMP) said the news that President Benigno Aquino III has signed his Administration’s new Minerals Policy was positive. Importantly the Policy was drafted within a consultative framework involving mining’s various stakeholders. “We recognise the hard work undertaken by his Policy team in considering all the issues brought up by the different stakeholders. The Policy offers solutions that will encourage the development of the country’s mineral resources,” COMP said in a statement. “We view the time spent on developing the Policy as recognition of the important role of responsible mining as a catalyst for economic growth. The Mining Policy is a signal to all investors of government’s desire to establish a consistent and stable business environment founded on a level playing field. We are hopeful that the Policy will harmonize conflicting interests, encourage investments, and foster sustainable development especially in the countryside where it is greatly needed.

committed to cooperate with the executive and legislative branches in developing a rational revenue sharing scheme. “We submit that legislation should also include a review of the Local Government Code, the Indigenous Peoples Rights Act, and the Internal Revenue Code in a purposive effort to harmonize conflicting provisions of these laws with the Mining Policy. “Our members applaud the Policy’s directive to ensure consistency of local ordinances with the Constitution and national laws, as well as LGU cooperation.” COMP said it looked forward to the continuation of the consultative process with the Mining Industry Coordinating Council. “We view the thorough and deliberate process begun by the Policy team as an effective way to elicit the participation and draw out the concerns of stakeholders in the difficult task of balancing interests.

“COMP respects the decision about closing certain areas to mining. Environmentally critical and protected areas are, and should always be, preserved for future generations. COMP also lauds the administration’s intent to improve the small-scale mining industry, and to develop downstream industries.

“We understand that the release of the Policy is only the first step towards our shared goal of inclusive and sustainable growth. COMP is committed to move President Benigno S. C. Aquino III’s mining agenda forward. We will work with his administration and other stakeholders in finding mutually acceptable solutions to the issues of revenue sharing, environmental protection, and sustainable development. Our entire pledges to assist in the implementation of PNoy’s mining agenda to help attain the objectives of increasing the country’s economic base and of enhancing the growth of communities in remote poverty-stricken rural areas.”

“We appreciate the position recognizing existing operating permits. COMP is

Tampakan Copper-Gold Project developer Indophil Resources was another to

18 Philippine Resources

welcome the Philippines Government’s issuing of the new Mining Policy in the form of an Executive Order under the authority of the President, His Excellency Benigno S. Aquino III. The new Executive Order, based on a broadly-communicated six-point Mining Policy, addresses 22 agenda items which include a detailed direction requiring local government ordinances to be brought into line with the Philippine Constitution and national laws. Indophil said this conformity issue is of considerable importance to the Tampakan Copper-Gold Project, in which Indophil holds a 37.5% interest under a Financial and Technical Assistance Agreement (FTAA) with the Philippine Government. The new Executive Order in part says: “The Department of Interior and Local Government and the LGUs (Local Government Units) are hereby directed to ensure that the exercise of the latter’s powers and functions is consistent with and conform to the regulations, decisions and policies already promulgated and taken by the National Government relating to the conservation, management, development and proper utilization of the State’s mineral resources . . .” Indophil said that in 2010, and under pressure from anti-mining and antiforeign investment lobby groups, the province of South Cotabato in which the Tampakan deposit is located, adopted a local ordinance that purports to ban open pit mining. “The most environmentally-friendly and economical method of mining the Tampakan deposit is by open pit mining, a form of mining method permitted under Philippine national law. The issuance Continued on page 20>

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<Continued from page 18 of the new Executive Order should be a catalyst to removing the open pit mining ban in South Cotabato,” Indophil’s CEO, Richard Laufmann, said. “Indophil commends the National Government for confirming the primacy of Philippine national mining law. This directive is a valuable step on the path to achieving the necessary approvals for the Tampakan Project from both the national and provincial governments,” Mr Laufmann said. “The Tampakan Project study process has been comprehensive and worldclass. It has involved extensive community and government consultation, addressed the technical, environmental and community concerns, and detailed the many benefits for stakeholders.” Mr Laufmann went on to say: “The issuing of this Executive Order is a strong sign that the Philippines welcomes those who advocate responsible mining. This initiative, led by President Aquino, will be appreciated by those seeking to invest in the future of the Philippines.”

ing contracts and agreements shall be subjected to possible renegotiation if mutually acceptable to government and the contractor, international investors are expected to welcome the Philippine Government’s reaffirmation that existing agreements, contracts, rights and obligations will be honoured. “Indophil looks forward to working with the Aquino Administration to follow through on this new Mining Policy and delivering a development-friendly investment environment; one that will allow us, our partners and other companies to do business successfully, while at the same time contributing to the growth of the Philippine economy and the Government’s fight against poverty,” Mr Laufmann added. Didipio golkd-copper project developer OceanaGold was another which believes the industry will benefit from the signing of EO79 OceanaGold’s MD and CEO, Mick Wilkes, said the company welcomed the recently signed ‘Executive Order 79’ covering the Philippines mining sector reform?

“The Executive Order is designed to ensure a more responsible, sustainable and equitable mining industry in the Philippines. “So, we view the Executive Order as a positive for reform for the mining industry in the Philippines, but more importantly for us because it will clear the way for the approval for an extension of our current exploration permit. We expect this approval to come through in the next month or two and we are ready to drill some near mine prospects. “In my discussions with senior Government officials and the Department of Environment and Natural Resources, I was pleased to hear that they are fully committed to our current Financial or Technical Assistance Agreement (FTAA) and our current fiscal sharing arrangements. “Importantly, the Government has said they will regulate more rigorously small scale mining to improve environmental management. They also want to improve the transparency of the mining industry which will increase the confidence of foreign investors to invest in mining in the Philippines,” Mr Wilkes said. ■

Despite a direction that existing min-

Chamber supports Philex over Padcal incident

he Chamber of Mines of the Philippines has declared it support for the management and staff of Philex Mining Corporation in their ongoing efforts to remedy the accidental discharge of non-toxic water and sediments from the company’s Padcal Project in Benguet Province.

The Chamber said in a recent statement that the discharge from the mine facility was quickly stopped because of the timely and appropriate steps that the company has taken. The discharge was triggered by heavy rains induced by Typhoon Gener. Thankfully, no injuries or fatalities were reported as a result of the incident. The Chamber said it also commended Philex for purposively communicating with the general public in a timely and transparent manner the remedial and corrective measures the firm is undertaking to prevent a recurrence of the incident. “We laud the fact that the firm is coordinating closely with the appropriate national and local government agencies in the conduct of the remedial works,” the Chamber stated “The deep sense of Corporate Social Responsibity that Philex has demonstrated in addressing this unfortunate incident underscores the commitment of COMP member firms to responsible minerals development. Philex’s proper handling of the incident is indeed worthy of emulation.” ■ 20 Philippine Resources

Infrastructure Investment August - October 2012

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ADB pours US$625 million into infrastructure support

he Asian Development Bank (ADB) has approved an equity investment in a US$625 million private equity fund focused exclusively on Philippine infrastructure projects – the largest and first of its kind in the country and well-timed to capitalize on various public-private partnership opportunities in the Philippines. ADB’s investment in the Philippine In-

vestment Alliance for Infrastructure (PINAI) fund is alongside commitments from Philippines’ state-owned pension fund Government Service Insurance System (GSIS), Dutch pension fund asset manager APG, and the Macquarie Group.

Philippines from top tier international partners, foster competition in domestic infrastructure finance, and establish a secondary market for well-performing infrastructure assets,” said Philip Erquiaga, Director General for ADB’s Private Sector Operations Department.

“Apart from our direct equity investment, ADB’s participation can help mobilize additional investment in the

“We are delighted to partner with GSIS, ADB and Macquarie and play a role in reducing the Philippine infrastructure funding gap. PINAI provides for an excellent investment opportunity and we expect it to enjoy an early mover advantage and to generate attractive riskadjusted returns for our clients: pension funds in the Netherlands with combined assets of over €300 billion (around $367 billion),” said Hans-Martin Aerts, Head of Infrastructure Asia at APG Asset Management in Hong Kong. ADB hopes the success of the PINAI fund will also spur more private equity funds that will catalyze additional foreign capital into the country, and further the development of domestic capital markets. “Our participation in the fund will contribute to economic growth and investors’ confidence. This will also mean enhanced returns on our investments which will redound to the greater benefit of our members and pensioners,” GSIS President and General Manager Robert G. Vergara said. The fund will invest in Philippine core infrastructure assets with an initial focus on existing projects that need expansion or rehabilitation, but will also be in a position to support the development of critical infrastructure projects from the ground up. According to the Philippine DevelopContinued on page 24>

22 Philippine Resources

Shaping the Future of Philippine Mining

MINING PHILIPPINES 2012 CONFERENCE & EXHIBITION

September 18 - 20, 2012 | Sofitel Manila

The Philippine Mining Industry’s largest and most prestigious annual event!

PREMIER SPONSORS

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Philippine Resources Mining, Petroleum & Energy Journal

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Chamber of Mines of the Philippines

Phone: (63-2) 635 4123 to 24 E-mail: info@chamberofmines.com.ph URL: www.chamberofmines.com.ph

DEPARTMENT of ENVIRONMENT & NATURAL RESOURCES

MINES & GEOSCIENCES BUREAU

Mineral Resources

August - October 2012

www.philippine-resources.com

Nickel is the rising star for Philippines mining

substantial drop in the gold purchases of Bangko Sentral Ng Pilipinas (BSP) from small-scale miners/traders led to a significant drop in Philippines mineral production output value in the latest quarter, according to the latest report from the Mines and Geosciences Bureau (MGB).

While gold productiom is down it is still a crtitical commodity within the Philippines resource sector.

The MGB reported that total metallic mineral production output value fell by 26% to PhP51.21 billion from PhP69.24 billion a year ago despite a major increase from the nickel sector.

its normal 50% position. Next came copper with an 18% share, or PhP9.02 billion. The remaining 3%, or PhP1.61 billion, was shared by silver, zinc, chromite and iron.

The report stated that total gold production crashed to 8,382 kilograms valued at PhP18.18 billion from 22,804 kilograms worth PhP44.52 billion year-on-year, down by 14,421 kilograms. Of this, the BSP gold purchases accounted for only 786 kilograms as against the 15,003 kilograms contribution the previous period, representing a 95% fall. In effect, the BSP gold purchases shared only a dismal 9.37% to the entire gold production, compared to 74% a year ago.

The MGB said the review period was marked by the fast growing number of mining projects in the country, particularly nickel. All in all, there are now 35 large and medium- scale mining projects in commercial operation, namely; six gold mines with silver as by-product; three copper mines with gold and silver as by-products; 21 nickel mines; three chromite mines; one iron mine; and one polymetallic mine.

It was a different story for nickel which showed its growing importance by providing 44% of total production value, or PhP22.40 billion. Gold, which until this year has never been surpassed at the top of the table, took the second spot with 35%, or PhP18.18 billion, well down on

The new mining projects include: (1) Siana Gold Project of Greenstone Resources Corporation in Surigao del Norte; (2) Sta. Cruz Nickel Project of Eramen Minerals, Inc. in Zambales; and (3) H.Y. Continued on page 26 >

<Continued from page 22 ment Plan, around 12% of the country’s $120 billion investment requirements need to come from the private sector. PINAI will target five to 10 investments of approximately $50 million to $125 million each to provide for portfolio diversification. PINAI will be managed by Macquarie Infrastructure and Real Assets (MIRA), the largest infrastructure fund manager globally, with approximately $97 billion of assets under management across 24 countries. The value of the assets is based on proportionate enterprise value, calculated as proportionate net debt and equity value at 31 March 2012 for the majority of assets. ADB, based in Manila, is dedicated to 24 Philippine Resources

reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2011, ADB approvals including cofinancing totaled $21.7 billion. APG, a financial services provider in the collective pensions market, provides pension fund administration, asset management, management support and communication services to pension funds. For these pension funds and their 4.5 million active and retired participants from the public and private sector, APG manages pension assets totaling about €302 billion (around $370 billion) (May

2012). APG administers over 30% of all collective pension schemes in the Netherlands. Created in 1936 through Commonwealth Act 136, the Government Service Insurance System or the GSIS provides social security coverage to employees in the government sector under a defined benefit scheme. It provides protection to its 1.4 million members against the occurrence of certain contingencies such as death, disability, separation, unemployment or retirement on the basis of their monthly compensation. Funding comes from members and the national government and instrumentalities in the form of mandatory contributions. ■

Resources August - October 2012

www.philippine-resources.com

Stock Exchange looking for more participation

he Philippine Stock Exchange, Inc. (PSE) is proposing Direct Market Access to investors in a strong bid to boost participation in the Philippine stock market.

The PSE said DMA is an arrangement whereby a Trading Participant’s client is permitted to enter orders to buy or sell securities directly into the PSE trading system or PSEtrade for queuing and matching without any manual intervention by the trading participant. “We hope the introduction of DMA in the Philippine stock market through our trading participants will significantly boost volumes through faster execution of trades,” PSE President and Chief Executive Officer Hans B. Sicat said.

Continued on page 28

<Continued from page 24 Nickel-Chromite Project of Sinosteel Phils. H.Y. Mining Corporation in Dinagat Islands. The MGB also noted that on April 2, 2012, the Bureau of Internal Revenue issued Revenue Regulation No. 6-2012 entitled “Taxation on the Sale of Gold and Other Metallic Minerals to Bangko Sentral Ng Pilipinas and Other Persons or Entities, Amending Revenue Regulations No. 7-2008, and Further Amending Section 2.57.2 (T) of Revenue Regulations No. 2-98, as Amended That Regulation clarified the taxability of the sale of gold by any person or entity to another person or entity other than the BSP. A significant provision in that Regulation is the reduction in the creditable withholding tax from 10% to 5%. On the international front, the prices of copper, silver and nickel for the first semester generally followed the downward trend mainly because of the global economic slowdown. Gold, on the other hand, maintained its status as a safe haven for investment during uncertain economic climate. The average price of the yellow metal for the first semester gained by 14% to $1,651.69 per troy ounce from $1,446.23 per troy ounce yearon-year. ■ 26 Philippine Resources

Mineral Resources August - October 2012

www.philippine-resources.com

Masbate provides CGA with strong quarterly return

GA Mining Limited has announced record quarterly production of 50,813 ounces for the June 2012 Quarter for its Masbate Gold Project.

The production resulted from the processing of 1,728,751 tonnes (also a quarterly record) at an average grade of 1.08g/t Au with 84.0% recovery.

Two successive strong quarters has resulted in production of a record 100,013 ounces for the six months January to June 2012. The production resulted from the processing of 3,315,301 tonnes at an average grade of 1.10g/t Au with 85.2% recovery. The company said the Masbate plant continued to operate above expectations with availabilities for the 6 months averaging 94.8%. Since recommissioning, the SAG mill has consistently operated at or above 6.6mtpa with the highest throughput recorded in May, reaching an annualised throughput rate of 7.6mtpa.

The Masbate project continues to perform strongly.

CGA is listed on the main board of the Toronto Stock Exchange and ASX. The Masbate Gold Project in the Philippines was successfully constructed with first gold poured mid-2009. The project has a total measured and indicated resource base of 5.13M ounces of gold, total inferred resource base of 2.83M ounces of gold and a proven and probable reserve of 3.097M ounces of gold. ■

<Continued from page 26 “DMA is being offered in various markets such as Malaysia, Singapore and Hong Kong. The introduction of DMA should also complement our efforts to promote online trading thus giving investors in the local stock market several options and channels by which to participate in the growth of Philippine-listed firms,” Mr Sicat said. To govern this activity, the PSE is proposing rules to provide the regulatory framework for the provision by Trading Participants of DMA services. Types of DMA Services include Automatic Order Routing (AOR), and Sponsored Access. Some trading participants currently offer online trading which is a form of DMA service. AOR is a type of DMA Service wherein a trading participant permits its clients to send orders electronically to the trading participant’s infrastructure, which in turn automatically sends the order to the PSEtrade. The two types of AOR are Internet Trading and Straight Through Processing (STP). Internet trading DMA is available for clients using a web-based trading application provided by the trading participant. STP on the other hand is available to a client if it uses an order execution system whether provided by the trading participant or a third party service provider that is directly connected to the trading participant’s infrastructure. Another type of DMA Service is Sponsored Access which is when a trading participant permits a client to transmit orders for execution directly to the PSEtrade without passing through the trading participant’s infrastructure. The proposed rules will also lay down certain requirements that trading participants and clients must comply with in order to address potential risks associated with DMA trading. ■ 28 Philippine Resources

Excellent service results in 97% increase in productivity “Our relationship with Weir Minerals started in 2007, shortly after the gold mine was first commissioned,” says Reefton’s Production Supervisor, Gerard O’Connor. During this period the mill liner needed to be redesigned to increase throughput, while maintaining the specified P80 - where 80% of particles meet the specified size. Wear rates were high on the shell lifters inside the 6.2m SAG mill, with throughput steady at 132 wet tonnes per hour. “The wider focus for us is on our production targets, and this is where Weir came in,” explains Gerard. “They worked with us to modify our products and processes to reach these targets.” “Essentially we redesigned our mill, from having four standard-sized lifters throughout the mill with the same lifter angle and cap, to now having five lifters of various angles, sizes and weight.”

“The angle changes enabled us to limit overthrow, and it also encourages the ore trajectory by pushing it to the back end of the mill,” he continues. “The change in cap - to align with the overall changes in size - has enabled us to focus on high wear areas, but by limiting the weight, we have kept relines safer.” While Weir Minerals experts take pride in their innovative engineering solutions, they are equally passionate about results. “This approach enables us to increase tonnage to 260 wet tonnes per hour and increase the wear life out of the lifters,” confirms Gerard. “That’s a 97% increase in throughput. We now have a 164% increase in wear life rates inside the shell lifters alone.” Weir Minerals supported these improvements with excellent communication, flexibility and dependability every step of the way.

“They always keep in mind the need to align with other areas of the plant that drive shutdowns, and they regularly visit the site, especially at re-line time. They carry out training and they discuss ways to continually extend the wear life of the products.” says Gerard. “We’ve had to call Weir Minerals at short notice when we’ve required a quick change out and they’ve been there, no question. You need this degree of dependability in our industry.” “You get the sense that Weir Minerals values our long term partnership,” he concludes. “When I reflect on the past five years with Weir Minerals, I would best sum them up as ‘proactive’. “It is very much a 50:50 arrangement with Weir Minerals, a real partnership with a shared vision.” www.weirminerals.com/Australia

Mineral Resources August - October 2012

www.philippine-resources.com

OceanaGold gets off to a flying start at Didipio gold-copper project

ceanaGold has reported the start up of mining at its US$220 million Didipio gold-copper Project in the Philippines. The company’s managing director and chief executive officer, Mick Wilkes, reported recently that mining commenced on the Didipio orebody in July and that the company is conducting grade control in preparation for the mining of fresh ore to be stored on the Run of Mine (ROM) pad in September. Mr Wilkes said commissioning plans are well advanced and the project remains on track for full commissioning in the December quarter this year. “We have recruited all the people we need for commissioning and the recruitment process for the people required for the long term operation of the process plant is proceeding very well. We’ll be commissioning the power station in September and expect to be doing the dry commissioning for the process plant in

October and then milling ore in November,” Mr Wilkes stated recently. Mr Wilkes said production of gold and copper at Didipio will commence at the end of this year. He said the company expected to be processing 2.5 million tonnes of ore in 2013 to produce 50,000 to 70,000 ounces of gold and 10,000 to 15,000 tonnes of copper.

Under a concluded agreement, OceanaGold would sell 100% of its concentrate to Trafigura for at least 5 years. Trafigura would take delivery of the concentrate from the mine site and will be responsible for the logistics of transporting it by land and sea to the smelters.

“We will have very low cash costs in the first 5 years of the operation due to high copper credits. The copper price is holding up well at around US$3.40/lb and that would mean that our cash costs per ounce of gold will be largely offset by the copper credits,” Mr Wilkes sasid.

OceanaGold recently announced that financing for the start up for Didipio was now fully covered after it received credit approvals from a group of large, multi-national banks for a US$220 million credit facility to be used if necessary, for repayment of convertible bonds maturing in December 2012 and December 2013 and for general working capital purposes.

OceanaGold has signed a Heads of Agreement (HoA) for the off take contract has been signed with Trafigura for the sale of the gold/copper concentrate, with the two companies currently working on the finer points of a final agreement.

It also reported that the recent announcement that that capital costs for Didipio had increased from US$185 million to US$220 million were due to a jump in the costs for the engineering and procurement work which was done in Australia. ‘”That is consistent with increases we’ve seen across the industry in Australia over the last couple of years or so,” he said. The company also reported that there were also increases in costs for construction of the tailings dam and also for site infrastructure generally.

Construction activities at Didipio. 30 Philippine Resources

August - October 2012

www.philippine-resources.com

SC63 JV has more time to find a suitable rig

ido Petroleum Philippines Pty Ltd, a subsidiary of Australian junior oil and gas company Nido Petroleum Limited, reports that the SC 63 Joint Venture it leads has received an extension to its license terms. Nido, the Technical Operator of Service Contract 63, on behalf of the SC 63 Joint Venture Partners, said the Joint Venture has been unable to secure a rig on acceptable commercial terms in order to meet the existing Sub-Phase 2b expiry date. The company’s managing director, Phil Byrne, said one of the key issues for the Joint Venture was the high mobilization/demobilization charges quoted to bring a drilling unit into the Philippines for a one well programme in the latter

32 Philippine Resources

part of 2012. It has been estimated that these charges would have added approximately US$6 million to the cost of the well.

costs of mobilization of a drilling rig and allow the Joint Venture Partners to allocate these savings to additional exploration activities.”

Mr Byrne said that in these circumstances the SC 63 Joint Venture sought, and has been granted, an extension from the Department of Energy (DOE) of the current Sub-Phase 2b for a period of 12 months from 24 November 2012 to 24 November 2013.

Operator Nido recently took over as Technical Operatorship of SC 63 from Service Contract Operator PNOC-EC for the duration of the commitment well drilling campaign.

“This extension of Sub-Phase 2b will enable the Joint Venture to coordinate the SC 63 programme with other drilling operations being planned in the NW Palawan Basin during 2013 and will allow the Joint Venture to beneficially share the

It said in its recent quarterly report that subsurface work and Basis of Design well planning progressed on the Apribada prospect, currently the leading drilling candidate to meet the Sub-Phase 2b commitment well. ■

Renewable Resources

Oil & Gas Resources

August - October 2012

November 2011 - January 2012

www.philippine-resources.com

Geothermal energy risk management

Gas2Grid ready to start Cebu Tdrilling campaign

By Fernando Penarroyo

63 1C@@3=:7B7 1/: :/<2A1/>3 6/A =>3<32 => >=@BC<7B73A 4=@ 1:3/<3@ 3<3@5G =>B7=<A E67:3 7<D3AB=@A /<2 5=D3@< ;3@=D723 nshore Cebu oil and gasA3@D713A explorer B63 3AA3<B7/: 7<4@/AB@C1BC@3 developer Gas2Grid /<2 :35/: and 4@/;3E=@9 B= 23D3:=> /<2 is preparing to spud the first 23>:=G <3E 3<3@5G B316<=:=573A well in1=<A723@7<5 a three well drilling program 34=@3 A=;3 =4 B63 93G following the receipt of an approival @7A9A E6716 6/D3 /< 7;>/1B =< @3<3E from3<3@5G the Philippine Department /0:3 >@=831BA /<2 B63 53<3@/: of Energy (DOE). />>@=/16 B= >@=>3@ /AA3AA;3@3D3<B7<5 B63 C>B/93 =4 ' >@=831BA ported drilling rig for the upcoming ex =@3;=AB =4 B63A3 /@3 0/@@73@A E6716 ploration drilling program which is set @3:/B3 B= B63 :=E :3D3: =4 /E/@3<3AA to target prospects with up to 50 million C<23@AB/<27<5 /<2 /BB3<B7=< /44=@232 barrels of recoverage oil. B= B63 1=;>:3F /@@/G =4 >=:71G @35C:/ B=@G B316<71/: 47</<17<5 /<2 =@5/<7 The three new wells will target both the H/B7=</: 4/1B=@A /4431B7<5 ' >@=831BA Miocene carbonate reefs and 7A Tertiary 3=B63@;/: >@=831B 47</<17<5 <=B ageBG>71/: sandstone reservoirs A163;3 trapped within B63 0=7:3@>:/B3 E7B6

>@= 4=@;/ /5@33;3<BA CB7:7H32 7< =B6 3@ @3A=C@13 >@=831B 23D3:=>;3/<73A B6/B 6/D3 B63 /07:7BG B= 47</<13 ' 7<D3AB ;3<BA 7< B316<=:=5G =@ >@=831BA 4C<2 32 =< / <=< @31=C@A3 47</<13 0/A7A =@ anticlines. The three wells that will test A;/::3@ 0CB 3<B@3>@3<3C@7/: 53=B63@;/: these drilling prospects are Jacob-1, Gu23D3:=>3@A A3397<5 7<D3AB=@A 4=@ B316 mamela-1 and/<2 =@ Ilang-1 >@=831B to depths47</<13 of 1,000 <=:=5G ' to 1,300 =@ B63A3 metres. 3<B@3>@3<3C@7/: 53=B63@;/: 23D3:=>;3<B 47@;A B63@3 /@3 27443@3<B Gas2Grid has estimated the prospects 0CA7<3AA ;=23:A /<2 0/:/<13 A633B A3< vary in size and resource potential of A7B7D7B73A B= 1=<A723@ million barrels with Jacob-1 hav several ,67:3 47</<17/: 7<AB7BCB7=<A 1/@3 ing an un-risked potential?C/:7471/B7=< of up to 50 4C::G 3D/:C/B3 23D3:=>3@ million barrels recoverable /<2 B@/19 @31=@2 037<5 / oil. ;/8=@ /<2 E3:: 9<=E< 23D3:=>3@ 7A <=B @3?C7@32 Jacob-1 is designed @31=5<7H3 to test the Miocene 031/CA3 47</<173@A 7<D3AB age Cebu Limestone trapped in a pinna;3>=@BC<7B73A 6/D7<5 1=<A723@/0:3 cle reef with targets in the Mi3F>3@73<13 7< secondary 23D3:=>7<5 3<3@5G >@=8 ocene age Malubog-Toledo Formation 31BA 0G >@=D727<5 3?C7BG =E3D3@ <3E marine sandstone reservoirs, trappedB= in 53=B63@;/: 23D3:=>3@A /@3 @3?C7@32 a drape anticline the reef and also 23;=<AB@/B3 B637@ above 1=;>3B3<1G 0G A3

:31B7<5 3F>3@73<132 /<2 E3:: @3A>31B32 1=<AC:B/<BA /<2 A>3174G7<5 /<2 CA7<5 3?C7>;3@=D3< B@/19 @31=@2 #=AB 74 <=B /:: 1/>7B/: >@7=@ B= / 53=B63@;/: >@=831B A >@=D3< 43/A707:7BG 7A 2=<3 B6@=C56 3?C7BG /<2 <=B 230B 7 </<17<5 =4 3F>:=@/B7=< /<2 1=<47@;/B7=< in onlap traps located on the side of the 2@7::7<5 CAC/::G 1=;3A 4@=; 1=;>/<G 3? reef. C7BG =@ @7A9 1/>7B/: >@=D7232 0G 7<D3AB=@A 3<3@/::G 7<D3AB;37B/: Gumamela-1 well1/>7B/: is designed to test A332 D3<BC@3 =@ 3?C7BG the Oligocene-Miocene age 23D3:=>3@ Cebu Lime47</<17<5 4=@ / 53=B63@;/: stone trapped in a pinnacle reef with C3 B= B63 6756 @7A9 7<D=:D32 E7B6 53= secondary targets being the <=B Miocene B63@;/: 3F>:=@/B7=< 0/<9A 2= >@= age Malubog-Toledo Formation marine D723 4C<27<5 B6@=C56 :=/<A C<B7: B63 :/B3@ sandstones, trapped in a drape anticline AB/53A 7< B63 23D3:=>;3@=13AA the reef also in onlap traps above C@7<5 B63 and 1@7B71/: @3A=C@13 723< located on the side of the23D3:=>3@ reef. B7471/B7=< >6/A3 B63 /7;A B= =0B/7< /A ;C16 7<4=@;/B7=< /A >=A The Ilang-1 well is designed to test the A70:3 /0=CB >=B3<B7/: @3A=C@13A E67:3 Early Miocene aged, turbidite 7<D3AB=@ 1=ABA /@3 :=E marine >@=D727<5 B63 sandstones within the lower4=C<2/B7=< part of the 23D3:=>3@ E7B6 / AB@=<53@ Upper Malubog Formation trapped in Continued on page 32 > Continued on opposite page

Brunel loc FP

34 Philippine Resources

Philippine Resources 31

Renewable Resources Mineral Resources August - October 2012 2012 November 2011 -2012 January February - April

www.philippine-resources.com

government and est program are /0A07:;809? ,> >3:=?0= ;=:50.? ;0=4:/> sector. Philex Mining’s <private Continued from page 32 B:@7/ =0/@.0 @9.0=?,49?D 1:= ;:74.D ,9/ In other Padcal operaContinued opposite page are of good quality and 8:/07492 they seem0.: to :9 , 14C0/ >.30/@70 B4?3 ;0=1:=8,9.0 8,=60? /D9,84.> B309 awards forfrom 2011, tions in the mebe undamaged by previous drilling and 2@,=,9?00> ,9/ 74<@4/,?0/ /,8,20> 1:= 9:84. =0?@=9> safest mine tallic category, an anticline. targets are the completion work.;=:50.?> ,=0 .3,=,.?0= ?30 1,47@=0 :1 ,..0;?,9.0 ?0>?> ,9/ ?480 0:?30=8,7 awards wentSecondary to Holcim La Union Cebu Limestone 7D .:884>>4:9492 TVI Resourceand Cebu Coal Meas- 4E0/ -D >429414.,9? @;1=:9? .,;4?,7 49A0>? plant in the nonures, Gas2Grid says oil was recovered on sev D e v#=:50.? eifl present. o p m 149,9.0 e n t s 4> ,7>: 34237D /0 809? 1:= 0C;7:=,?4:9 B077 /=477492 ,9/ ?30 metallic categoeral drillstem tests conducted over @? the ;09/09? :9 ?30 ;:B0= ;@=.3,>0 ,2=00 49>?,77,?4:9 :1 ;7,9? ,9/ 0<@4;809? for surface opry, MRL Gold’s Gas2Grid Repubis also preparing to re-enter :9.0 gross ?30 interval 2,185-2,233 metres when 809? ## 0C0.@?0/ -0?B009 ?30 /0A07 20:?30=8,7 ;=:50.?> ,=0 ;7,.0/ eration, Surigao-Agusan the historic well to conduct a 49 .:880=.4,7 :;0=,?4:9 ?30 1@07 >:@=.0 the Malolos-1 well was originally drilled :;0= ,9/ ;@=.3,>492 09/ @>0= ?D;4.,77D lic CementMalolos-1 Buprojects in the workover with separate rig. and tested in 1960. However, sustained ,9 070.?=4.,7 @?474?D &30 a ## ;=:A4/0> 4> >0.@=0 1:= ?30 /0.,/0> :1 0C;0.?0/ 7410 lacan for program cement exploration catproduction from these oil bearing sand1:= ?30 >,70 :1 .,;,.4?D ,9/ 090=2D ,? ,9 ?480 B4?3 , >?0,/D =0A09@0 >?=0,8 plant operaegory, with speResource Development, represented by 9:?0 its president Eugene Mateo (second from Malolos-1 drilledTVI to a total depth of stones was not established at that time, ,2=00/ ;=4.0 ;=4.0 >?=@.?@=0 ,9/ >;0.4 ? 4> 2::/ ?: ?3,? ?=,/4?4:9,7 tion, Apowas Land cial awards for right) and chief operating officer John Ridsdel (far right), won the award for the safest mining 2,748 metres 1960. Gas and oilasbearing and mine the company now9:B attempting to mineral processing 140/ ?480 ;0=4:/ 9 ,//4?4:9 ?30 149,9 49>@=,9.0 ;=:/@.?> ,=0 -0.:8492 and Quarryin for Apex Mining operation well as safest awards forissurface operation and (concentrator categories). Theythis received fromand PMSEA sandstones wereB477 deemed to be, present access knownthe oilawards reservoir con- president Louie .4,7 49>?4?@?4:9 49.7@/0 .,=01@7 8:=0 ,A,47,-70 ?: ?30 $ 49/@>?=D B3470 quarry operaand Rio Tuba Sarmiento (far left) and Mines and Geosciences Bureau director Leo Jasareno (second belowFCF 1,000 metres in from the Malolos-1 well 90B duct tests member to try and establish commer,9,7D>4> :1 Miner?30 49?0=.:990.?4:9 >?@/40> 149,9.4,7 =4>6 8,9,20809? 49>?=@ tion, Nickel Mining left), with awards committee Lita Lee (center) of Rapid City Realty and but for they explorawere not targeted during an 809?> ,=0 0A:7A492 !0A0=?3070>> ?30=0 cial oil production. ,9/ ?=,9>84>>4:9 ,2=00809?> =:8 ?30 als for best nursery Development Corporation. earelier (category workover program conducted in 4> , 900/ 1:= .@>?:84E,?4:9 :1 .:A0= =4>6 ;0=>;0.?4A0 3:B0A0= 4? 4> ;=010=,-70 tion and best rehaMarch 2010.Gold Surigao-Agusan for ,20 ,9/ 74960/ ;=:/@.?> ?3,? ;=:A4/0 , GasToGrid said numerous other sand- bilitation strategy respectively. ?3,? 0.:9:84.> ,9/ /08,9/ 1:= ;:B0= A), MRL Mining Service for mineral processstone(crushing intervals1:= are?30 located above the /=4A0 ;=:50.?> =,?30= ?3,9 .:9?=,.? ;=: >:7@?4:9 =4>6> 4930=09? 49 exploration (category B), Repub- ?:?,7 ing plant category). PMSEA’s Pasasalamat Award was ThatCement Phase Norzagaray 1 workover targeted gas 20:?30=8,7 oil bearing sandstone (2,173 metres). A4>4:9> 7>: .:9?=,.?> 902:?4,?0/ B4?3 )3470 20: lic for mineral Carmen/0A07:;809? Copper was cited for conferred upon former Mines and bearing sandstones above 1,000 metres Originalcombined well records indicate that 04?30= >4/0 -0492 ,? , /4>,/A,9?,20 ,=0 , 090=2D B477 .:9?49@0 ?: both 1,.0 Geosciences Bureau director and Deprocessing (cement category), TVI ?30=8,7 safest operation, Northern in depth and this work proved the ex- :->?,.70> ?: 2,49 49A0>?809? 8,=60? ,. gas and water haveimproved been produced .,@>0 :1 .:9.0=9 1:= 709/0=> Resource Development for mineral Cement for most safetyfrom per- Fernando partment“Ronnie” of Environment Natural Penarroyoand is the partner at Puno and Penarroyo istence of natural gas >?=0,8749492 and oil at these these intervals on open hole drill stem managing processing !00/70>> ?: >,D ?30 .0;?,9.0 ,9/ ,;;74.,?4:9 ?30=0 4> =::8 (concentrator category), formance and TVI Resource DevelopResources undersecretary Jerry DoLaw Offices (www.punopenalaw.com). He water andhis possible shallow depths.for The workover also de- 1:= testing and the company now090=2D fully specializes ;0=84? ;=:.0>> -D 2:A0=9809? =02@7, :;?484>8 ,> mining ?30 @>0 operation. :1 is?34> Apex Mining mineral processing ment for safest lino for contributions to uplifting inifenergy and establishing resources law,commercial gas production. ■ development. termined thatcategory) the sandstone reservoirs >:@=.0 4> :97D -02499492 ■ evaluating the for distribution of gas forand project ?:=> B477 3,A0 ,9 48;,.? :9 20:?30=8,7 (extraction and Philippine Awardees the best mining the Philippine mining industry. ■ finance and business

Brunel Ovs FP

35 Philippine Resources 33 25

Swan Exhibitions: 103 Scarborough Beach Rd, Mt Hawthorn, WA 6016 Tel: +61 8 9443 3400 Fax: +61 8 9443 2424 www.miningaustraliaexpo.com.au

Mineral Resources August - October 2012

www.philippine-resources.com

Otto Energy has a busy schedule ahead of it

ustralian-headquartered Philippines oil and gas specialist Otto Energy Ltd reports that the Philippines Department of Energy (DOE) has approved an extension to the current Exploration Sub-Phase 3 of the SC69 permit by 9 months. The extension will provide more time to follow up on new 3D seismic data which has confirmed the presence of three attractive potential drilling targets in the most prospective portion of the block, Lampos, Lampos South and Managau East Ottoâ&#x20AC;&#x2122;s Chief Executive Officer, Gregor McNab, said an extension to the present permit term has been sought to allow sufficient time to complete detailed technical evaluation of the prospects and allow considered selection of the most attractive for drilling

During the extension period, outstanding technical work will be completed, the prospect portfolio will be ranked and well planning will commence. Otto also reports that the joint venture in offshore Palawan permit SC55 is currently preparing for the drilling phase of exploration activities. BHP Billiton is currently negotiating access to an appropriate ultra deepwater rig with specialised well control equipment that will promote safe drilling operations on the proposed Cinco prospect. As availability of such rigs is currently limited, Otto said a specific date for commencement of drilling operations in SC55 can not be given. However Otto said it maintains its longstanding view that SC55 holds significant hydrocarbon potential and the company looks forward to seeing the drilling program executed as soon as is safely possible.

Otto said a robust, diverse and extensive portfolio of exploration prospects and leads has emerged from the recent analysis of more than 2,400 km2 of 3D seismic data acquired in 2010. 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. SC51 Meanwhile, the SC51 JV of which Otto is the operator, is looking forward to obtaining new seismic data over the onshore Leyte licence. Otto said that once new seismic data has been acquired it will be used to locate a new well on the same structure as tested by follow up well to Duhat-1, where oil and indications were encountered in 2011. â&#x2013;

38 Philippine Resources

ELLIOTT GEOPHYSICS AIRBORNE DIVISION

AEROMAGNETIC SURVEY Elliott Geophysics is an Australian based company,

established in 1987, and now celebrating its 25th year in business. The companyâ&#x20AC;&#x2122;s principal expertise lies in mining geophysics as applied to metalferrous deposits, coal, and oil, but the company also has experience in geophysical surveys over toxic waste dumps, construction sites, pipeline routes, tunnels and other geotechnical projects. Methods most often used by EGI include aeromagnetics, electrical methods, downhole surveys, gravity, and high resolution shallow seismic (marine and land). The company also offers GPR surveys for special applications. Elliott Geophysics International Ltd. is the parent company for PT Elliott Geophysics Indonesia and Elliott Geophysics India Pvt. Ltd.. The President Director is Dr. Peter J. Elliott who is a graduate of the University of Melbourne and Macquarie University in Australia. Dr. Elliott has had some 36 years experience in mining geophysics.

PRINCIPAL OFFICE

Elliott Geophysics International Pty. Ltd.

PO Box 1307, Booragoon, WA 6954 Australia Ph: 08 9434 1250 Fax: 08 9310 8669 Email: elliottgeophysic@aol.com www.geophysicssurveys.com

INDONESIAN OFFICE PT.Elliott Geophysics Indonesia JI. Poncol Raya, #11, RT003/RW07 Gandaria Selatan, 12420 Jakarta Selatan, Indonesia Ph: +6221 750 3477 Fax: +6221 7591 1432 Email: elliottgeophysic@aol.com www.geophysicssurveys.com

In addition to normal mining services, Elliott Geophysics International provides logistical and technical support to other contract companies with specialized expertise in areas not immediately covered by EGIâ&#x20AC;&#x2122;s own in-house expertise. In December 2001, Elliott Geophysics opened a branch office in Manila, Philippines. The Philippine Company trades under the name of Independent Exploration Services Inc. Elliott Geophysics has been operating in the Philippines since 1999. During the past 25 years Elliott Geophysics has completed over 400 contracts, for more than 200 clients, throughout the world; including countries such as: Australia, China, Fiji, Indonesia, India, Kazakhstan, Laos, Mauritania, Myanmar, New Zealand, Oman, Paua New Guinea, Philippines, Thailand, and the USA.

PHILIPPINE OFFICE Independent Exploration Services Suite 25F Pearl of the Orient Tower 1240 Roxas Boulevard, Ermita, Metro Manila 1000, Philippines Ph: +632 523 6483 Telefax: + 632 525 2739 Email: elliottgeophysic@aol.com www.geophysicssurveys.com

INDIA OFFICE

Elliott Geophysics India Pvt. Ltd Unit M-5, Munish Plaza, 20 Ansari Road, Darya Ganj New Delhi, India Cell: +91 99100 29050 Email: elliottgeophysic@aol.com www.geophysicssurveys.com

Oil & Gas Resources August - October 2012

www.philippine-resources.com

Site wins Shell training work

ite Group International Limited has been awarded a multi-year contract to provide training and assessment services to the Malampaya deep water Gas-to-Power project operated by Shell Philippines Exploration B.V on behalf of Joint Venture (JV) partners Chevron Malampaya LLC and the Philippine National Oil Company-Exploration Corporation. The majority of the services will be delivered at Site’s Clark training facility in the Philippines. In addition, there will also be a component of on-site assessment at fabrication yards used by the project. In the initial year of the contract, Site will be training and assessing up to 800 employees and contractors of the Malampaya Phase 2 and 3 projects with subsequent years expected to result in the training of around 500 people per year. Site’s CEO and Managing Director Vernon Wills said the company was delighted with the contract award. “We are very pleased to be working with the Malampaya JV Partners to provide health and safety skills and competency training to the workforce supporting the Malampaya Phase 2 and 3 Project. “This contract is the result of a lot of hard work by our team and reflects the quality of the training facility that we have developed at Clark. As we have done with our partners Monark Foundation (Philippines Caterpillar Distributor) in the establishment of a heavy diesel training facility, we will similarly be setting aside an area of the Clark facility dedicated to the Malampaya training program. “These facilities are ready to go and we will commence training in September this year. We look forward to a long association with the Malampaya Project – an important source of energy for the Philippines.” Malampaya’s next-phase development aims to maintain the level of production and maximise the recovery of indigenous natural gas from the Malampaya and Camago reservoirs. “Malampaya Phase 2” will entail drilling and development of two additional wells by 2014; “Malampaya Phase 3” will involve the installation of a new platform, where additional equipment and facilities will be housed by 2015. The projects, entailing new investments, are seen to further benefit the Philippines through energy security and government revenues, and will continue to be a major source of power for Luzon’s energy requirements in the years to come. ■

40 Philippine Resources

Oil & Gas Resources August - October 2012

www.philippine-resources.com

Shell confirms commitment to Philippines with major LNG plans

nternational petroleum giant Shell has confirmed its Aquino III tothe UK as an official guest of the British Governplans to increase its investments in the Philippines with ment. an addition of over US$1.6 billion for the development of Another major global firm, Unilever also announced an MoU to an LNG import and re-gasification terminal. increase its investment and expand manufacturing facilities in Shell, which is already the largest foreign investor in the Phil- the Philippines; Cleveland Bridge signed a £120 million contract ippines with US$5 billion in investment, outlined its commit- for in the National Roads Bridge Replacement Project. ■ ment to the country during a recent visit by President Benigno

Canadian Helicopters lands Shell offshore platform work

anadian Helicopters Group Inc.’s wholly-owned subsidiary, Helicopters (NZ) Limited (HNZ) has entered into an offshore oil and gas helicopter support contract with Shell Global Solutions International B.V. Beginning in September 2013, HNZ will provide crew change helicopter services from Manila to Shell’s offshore petroleum platforms in the Philippines using one AgustaWestland AW 139 helicopter. Commencing in the second quarter of 2014, a second AgustaWestland AW 139 helicopter will also be deployed to support oil and gas exploration and development work by Shell in the Philippines The initial term of the contract is four years with potential five

one-year option periods, exercisable by the customer. Revenues under the contract during the initial four year term are expected to be approximately US$40 million. The two aircraft required to perform the work will be obtained by way of purchase or lease. “We are extremely pleased to have been selected by Shell for this major piece of business in Asia” said Don Wall, the President and Chief Executive Officer of the Company. “This is not only a win in terms of building on the strong relationship we have built with Shell in New Zealand, but it is also consistent with our strategy to grow the business and expand from our historical areas of strength in Australia and New Zealand deeper into the Asian market.” ■

Total farms into Block SC 56

otal E&P Philippines B.V. a subsidiary of French oil and gas giant Total, has signed a Farm-in Agreement with Malaysian company Mitra Energy (Philippines SC-56) Limited to acquire a 75% interest in the offshore Block SC56, located in the Sulu Sea.

“With this new acquisition, Total continues to pursue its strategy to further expand its acreage in significant potential plays in new exploration areas, notably in deep offshore Asia Pacific” stated Jean-Marie Guillermou, Senior Vice-President Asia Pacific, Exploration and Production.

The block covers a total area of around 4,300 km², in water depths ranging from 200 to 3,000 meters. Mitra will retain a 25% interest in SC56.

A new exploration phase is now under- Total is one of the largest integrated oil way and Mitra will initially operate the and gas companies in the world, with acseismic works including the re-process- tivities in more than 130 countries. ■

42 Philippine Resources

ing of existing data and the 3D acquisition of additional 500 km², after which the operatorship will be transferred to Total for the drilling operations. This transaction is subject to approval by the authorities of the Republic of Philippines.

August - October 2012

www.philippine-resources.com

Australian delegation looking to strengthen bilateral relationships

delegation of Australian Senators and Members of Parliament from the Australian Federal Parliament recently visited the Philippines to hold a series of meetings with Philippine Congressional counterparts and local officials in the context of a deepening bilateral relationship. The delegation’s visit follows the recent visits to Manila of Australia’s Governor-General, Quentin Bryce, and former Foreign Minister, Kevin Rudd.

form that would serve to continue Robredo’s legacy,” Senator Moore added. Australia is the Philippines’ largest bilateral grant aid donor, with an estimated AUS$128.7million (PHP5.5billion) aid program for 2012-2013. This is being delivered under a new aid policy framework that enables planning and implementation of aid investments more ef-

fectively in terms of lives saved, people lifted out of poverty, children educated and vulnerable people provided with lifesaving assistance in times of crises. In the Philippines, Australia works closely with the government and other partners to address critical gaps in social services for the poorest Filipinos, particularly education, and to reduce their vulnerability to natural disasters and conflict. ■

The delegation’s leader, Senator Claire Moore from Queensland said, “Our delegation is very pleased to be in Manila at a time when the long-standing and warm relationship between the Philippines and Australia is in such a good state. We are here to meet our political counterparts and other interlocutors to discuss the ways in which our partnership is advancing the interests of Australians and Filipinos.” “Australia’s broad relationship with the Philippines encompasses a number of areas including development cooperation, defence, police and security cooperation, trade and investment links as well as cultural and science exchanges” Senator Moore noted. Referring to the recent flooding which struck the Philipines, Senator Moore said, “We are saddened by the floodings earlier this month and the resultant loss of life and property. But we also believe in the resiliency of the Filipino people, which is why our cooperation activities also target disaster risk reduction in conjunction with Filipino authorities.” “We are also deeply moved by the loss in the past week of one of the Philippine Government’s most effective champions of good governance, Jesse Robredo. But we have faith in the country’s ability to bounce back and will continue to pursue cooperation programs on political re-

Philippine Resources 43

Natural Resources August - October 2012

www.philippine-resources.com

ADB, P&G to Pilot Transforming Waste to Energy in the Philippines The Asian Development Bank (ADB) and Procter & Gamble Co. (P&G) are teaming up to explore the feasibility of building “waste-to-worth” energy plants in the Philippines that will generate up to two megawatts of power using solid waste collected from homes and businesses. “The disposal of municipal solid waste is a serious environmental and social challenge,” said Jose Manuel Limjap, Investment Specialist at ADB. “This is the kind of innovative project that brings the public and private sectors together to tackle a problem seen throughout the developing world. Successfully piloting an integrated solid waste management system means it could be replicated in other parts of the world.” The ADB said that around 6,700 tons of solid waste is generated every day in

metro Manila alone, but only 720 tons are recycled or composted. The balance is hauled to the city’s dump sites, openly burned, or dumped illegally on private land, in rivers, creeks, or Manila Bay. This has led to serious environmental problems, such as air pollution and soil and groundwater contamination. The “waste-to-worth” energy plants project aims to eliminate the need for landfill, as less than 1% of the waste is expected to remain after processing, and this will mostly be material that may be recycled for use in products like asphalt. ADB has approved a US$385,000 technical assistance plan, equivalent to 60% of the total cost, to help determine the viability and sustainability of waste-toenergy projects. If deemed viable and sustainable, a lead waste-to-energy plant

Pig wastewater being turned into energy

new farm waste collection system developed with the assistance of the Land Bank of the Philippines captures methane that can be converted to electricity. The system is now earning carbon credits.

For years, the wastewater from Marcela Farms’ 40,000 pigs drained into an open air lagoon, raising a smell and a pollution problem on the island of Bohol, a popular tourist destination in the Philippines. It also contributed to a larger, global problem: its waste stream of manure produced methane, a potent greenhouse gas that escaped into the air contributing to climate change. Today, the farm is earning carbon credits and producing both power and sludge for fertilizer by separating the methane and the solid waste as part of the first animalwaste biogas Programme of Activities in South-East Asia to be certified by the United Nations Framework Convention on Climate Change (UNFCCC). The difference is in how the farm collects its animal waste. A new waste collection system developed with the assistance of the Land Bank of the Philippines and the U.S. Environmental Protection Agency’s Global Methane Initiative Partnership now directs the farm’s wastewater into a modern, covered anaerobic lagoon that separates the methane from the sludge. ■ 44 Philippine Resources

will be piloted in the Philippines by 2016. The project further aims to develop the municipal solid waste management system into a profitable and flexible business model and supply chain for the collection and treatment of municipal solid waste. If proven successful, it is hoped that the model will be replicated in other areas with such a need. P&G, a consumer goods company, is conducting these studies to further its long-term sustainability vision of having zero consumer or manufacturing waste go to landfills. ■

WPP forms new Phil JV

he world’s largest advertising and PR agency WPP has announced that its wholly-owned operating network, Ogilvy & Mather, and Philippines company A+B Expedio, have formed a joint venture. Ogilvy & Mather is global marketing communications company, while A+B Expedio is a leading below-the-line agency in the Philippines with expertise in activation and field and events management. The Philippines joint venture company will be called OgilvyAction. OgilvyAction brings together A+B Expedio’s field marketing capabilities, local activation experience and network with Ogilvy & Mather’s strength in analytics, strategy, development, digital and creative to offer best-in-class activation solutions. The joint venture company will be based in Metro Manila. ■

August - October 2012

www.philippine-resources.com

DOE signs agreements on reducing government power spend

he Philippines Department of Energy (DOE), along with other 56 agencies from the National Capital Region (NCR), Southern Tagalog, and Bicol, have signed a Memorandum of Agreement (MOA) as part of the government retrofitting initiative under the Philippine Energy Efficiency Project (PEEP) which aims to save electricity expenditure of government agencies and reduce carbon emissions. The PEEP is a project which envisions to lower power demand in the country. The DOE has emphasized that the project was borne out of the need to effect changes in the consumptive behavior of the consumers. It has since then transposed that behavior change in the government sector. “Electricity is a commodity and its price is subject to availability of supply and

consumer demand. We should always be mindful that energy wastage effectively reduces total available energy supply, artificially lifts demand, and promotes high prices,” Undersecretary Loreta G. Ayson stated. Aside from PEEP, the government is already implementing the Government Energy Management Program (GEMP) which, from September 2005 to December 2011, has already effected savings of Php 1.6 billion in electricity bills and Php 261 million in transport fuel under the DOE-National Energy Efficiency and Conservation Program (NEECP). The MOA signing comes on the heels of the government retrofitting in Metro Manila in 35 government buildings, completed in February 2012, which targeted 1.85 GWh savings, Php 13 million, and 741 tCO2 avoidance annually. The

DOE has expanded the retrofitting component of the PEEP to include 100 government buildings from Luzon, Visayas, and Mindanao, with additional potential electricity savings of 6 GWh, to Php 60 million, and annual avoidance of 3,246 tCO2. The Government Building Retrofit is part of the efficient lighting initiative component of PEEP. This component also includes the national residential lighting, public lighting retrofit including streetlights, traffic lights, and solarpowered LEDs in off-grid areas, and the carrying out of energy efficiency testing and lamp waste management which intends to expand the DOE’s existing testing laboratory and the establishment of a mercury waste management facility for recovery of mercury from used fluorescent lamps. ■

MESD begins major biodiversity study program

he Philippines Mines and Geosciences Bureau - Mining Environment and Safety Division (MESD) is conducting a five-year research program on Biodiversity Offsetting which aims to determine the effectiveness of bio-offsetting as a management tool in regulating biodiversity and the environmental impacts of mining activities.

According to the International Council on Mining and Metals (2006), bio-offsetting is a way of conserving and protecting the existing biodiversity within the offset area to compensate for unavoidable environmental impacts of mining such as vegetation loss. It follows the principle of “like for like or better” that promotes enhancement in either the quality or quantity aspects of the offset activity (Environmental Protection Authority, 2006). One possible offset area that has been identified is the mine site of Holcim Philippines, Inc. – Bulacan Plant in Norzagaray, Bulacan. Two more offset areas will be established in the third quarter of this year. These are in the mine sites of FCF Minerals Corporation in Quezon, Nueva Vizcaya; and Silangan Mindanao Mining Corporation, Inc. in Placer, Surigao del Norte. The MESD targets to complete their research in 2015. ■ 46 Philippine Resources

August - October 2012

www.philippine-resources.com

Lockforce strengthening its presence in the Philippines

Lockforce Philippines Staff. From left to right: Tim James (Project Principal), Matt Brown (Director), Mikki Rosanes (Office Assistant), Ana Garcia-Benignos (Office Administrator), Troy Lockyer (President), Tama Jensen (Country Manager). 48 Philippine Resources

August - October 2012

www.philippine-resources.com

Leightons awarded major Davao Power Plant Contract

eighton Contractors (Philippines), a part of the Leighton Asia, India and Offshore Group, has secured more than A$122 million worth of construction work for a coal-fired power plant project in Davao City and Davao del Sur in the Philippines. The 300-megawatt circulating fluidisedbed coal-fired power plant is being developed by Therma South, Inc., a wholly-owned subsidiary of Aboitiz Power Corporation. The Therma South power project is designed to address the Mindanao region’s power supply needs. The facilities will provide the Davao area, and Mindanao as a whole, with reliable, dependable and competitively-

priced power, thereby strengthening the project is scheduled to last 37 months region’s position as a destination for busi- and will create around 2,000 jobs to help ness, investment and tourism. support the local community. Under the contract, Leighton Contractors (Philippines) will be responsible for the construction of a 120-metre diameter coal storage dome, installation of coal conveyors, ship unloader and stacker reclaimer, construction of 1,500 metres of 2.5-metre diameter circulating water mains, the circulating water intake structure, projectwide piling, site infrastructure, ash lagoons and the power island. Leighton will also design and construct the permanent coal unloading jetty, temporary unloading jetty and site-wide ancillary buildings.

“We are proud to be part of the consortium, together with Black & Veatch, and for being awarded this project as it recognises our comprehensive construction capabilities. Leighton Contractors (Philippines) has been an integral partner in the development of major building, mining and power projects in the Philippines for over 15 years. We look forward to working with AboitizPower to deliver the Therma South power project to the highest safety, quality and environmental standards,” Boyd Merrett, Leighton Asia, India and Offshore Group’s ExecuConstruction of the Therma South power tive General Manager for the Philippines said. ■

Philippine Resources 49

August - October 2012

www.philippine-resources.com

Philippine Mining Club audience receives Rapu-Rapu Island Project Update Another well attended Philippine Mining Club Luncheon recently featured a presentation by Rogelio E. Corpus the President of Rapu-Rapu Minerals, Inc on the TOPIC: “Rapu-Rapu Polymetallic Project Success”. Mr Corpus is a Licensed Mining Engineer. He attained his B.S. Mining Engineering Degree at the Mapua Institute of Technology in 1976 and a Mining Board Examination Placer in the same year. Mr Corpus has substantial hands on experience on mining projects located in and outside the Philippines. Rapu-Rapu Minerals, Inc. is studying the possibility of extending the mine life of its project in Albay or expanding its project area, Mr. Corpus told the Friday Philippine Mining Club Luncheon on August 10 which had a 260 strong group of attendees. The Rapu-Rapu polymetallic project is situated in Rapu-Rapu Island which is located east of Legazpi City, Albay and as of now has an estimated mine life until 2013 on its current estimated resources. Located in the southwest of Rapu-Rapu Island it span the three barangay of Pagcolbon, Malobago and Binosawan. These barangays are designated as the Direct Impact Areas (DIA) of the Project. The designated Indirect Impact Areas are Linao, Santa Barbara and Tinopan. ■

Rogelio E. Corpus made a presentastion on the Rapu-Rapu Project to the Philippine Mining Club Luncheon.

L to R David and Alan from QED along with Geoff Bosswell, Resminco and George Pike of GHD attended the August 10 luncheon. 50 Philippine Resources

Derek Mullen and Cecilia Diez Pamular represented Philippine Resources at the luncheon.

August - October 2012

www.philippine-resources.com

Aaron Hawley of Roxex and Troy Lockyer, President Lockforce Consultancy Int.

Leo Nidea & Rey Abig from FLsmidth

Shanna Deguzman and Vince Abasolo from Resource Advisors enjoyed the luncheon.

David Attewill of Lycopodium & Anne Lavers from GHD.

Security & Crisis Management

52 Philippine Resources

Invessgaaons

Business Intelligence

August - October 2012

www.philippine-resources.com

DOE stages its own Olympics

he Philippines Department of Energy (DOE), in partnership with the Asian Development Bank (ADB), has launched its “Watts Out!“ TV Olympics to demonstrate the most energy efficient technologies available in the local television market. The “Watts Out!” campaign is part of DOE’s “Bright Now! Do Right. Be Bright.” energy efficiency initiative and was held from August 16 - 22 at the Atrium, SM Megamall in Mandaluyong City. TV manufacturers were invited to participate in the event to display their most energy efficient 32 inch CCFL- and LEDbacklit LCD models. The power consumption of each television will be monitored during the course of this seven-day event. “Watts Out!” will demonstrate to consumers the effect an appliance’s power con-

sumption can have on their monthly electricity bill. Many consumers are unaware that the power rating, measured in Watts, is displayed on the back of nearly every appliance. The lower the Watts rating, the less it costs to operate. By making the choice to purchase energy efficient TV or appliance, consumers are choosing to save money on their electricity bills and are also making environmentally conscious choices for the Philippines. “The Watts Out! TV Olympics is part of the government’s efforts to effect a change to a more sustainable and practical lifestyle for Filipinos. In this way, we are not only lowering our electricity bills, we are also helping in managing our power consumption for our benefit and the environment since this will lessen our carbon footprint,” DOE Secretary Jose Rene D. Almendras said, noting that energy efficiency and conservation is a pri-

ority for DOE and a low-cost way to help the environment. DOE is promoting energy efficiency and conservation through the development of energy labeling and efficiency standards for home appliance. “Hopefully with the success of this campaign, more and more people will be conscious in checking the energy labels of all the appliance being used at home, in the offices, and other areas to be more energy efficient and practical with our choices,” Secretary Almendras added. “Watts Out!” is a technical assistance project funded by the ADB as part of climate change mitigation efforts. According to research, a color television is a high priority item for most Filipino households. ■

Mayan Iron CorporatIon LtD is a minerals exploration company, listed on the australian stock exchange (asx – myn), and based in perth, Western australia. the company has projects in the mid West of Western australia, and in guatemala, south america, and is seeking mining opportunities in the philippines. RegisteRed addRess: Level 1, 8 Outram Street, West Perth Western Australia 6005

54 Philippine Resources

Postal addRess: PO Box 219 West Perth Western Australia 6872

telePhone: +61 8 9226 0299

email: info@mayaniron.com

Fax: +61 8 9321 1627

WeB: www.mayaniron.com

August - October 2012

www.philippine-resources.com

Managing Employees Successfully Through Change -“The Missing Piece” By Bob Flecknell

ment or unit level are not managed well. This creates unacceptable organizational and employee performance slippage, costly implementation delays, budget overruns and unproductive employee resistance.

e live and operate in a world filled with high intensity, high paced change. It feels like trying to change a flat tire while the car is moving! No time to stop! And continuing economic conditions and competition continue to put pressure on organizations to operate even more effectively. The successful organizations implement changes more frequently because they need to keep improving operations, profits and shareholder value. But to be blunt, many organizational changes at corporate, division, depart-

So why don’t some changes “take” successfully?

lead, communicate with and support employees through their journey in adjusting to the change. Neglecting this plan makes change painful and costly to the organization.

It is because most change management plans include only the change strategy and the implementation plan. These are only two of three elements of a well designed change plan. The critical missing piece is the transition plan, which maps how to effectively Continued on page 56>

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Philippine Resources 55

August - October 2012

www.philippine-resources.com <Continued from page 55 The key to implementing a successful transition plan is to have first line and senior managers who are well trained in managing transition. Unfortunately many managers are thrown in the deep end of the pool with no transition training, yet are expected to implement the change and bring all their people along at the same time. Isn’t change and transition the same? No! Change and transition are different. Change is date / task / results driven; the go live date for the takeover; or launching of the new customer service interface; or transferring employees to a new facility; or implementing the new organizational structure; or activating a staff reduction; or rolling out the redesigned employee performance plan; or the new computer system, or introducing the new expatriate director of operations.

They experience real or perceived losses and show anger, confusion, resentment and even excitement. So, managing people through just one change is a significant challenge for employees and their manager. Imagine the operational impact that multiple changes create! Peoples’ Journey through Change - A Three Phase Model of Transition Management consultant William Bridges has done a deep dive into transition, consulting with many large organizations. He believes that employees’ transition, involves three phases which must be well managed for a successful change; Managing Endings: letting go of the past; Managing the Neutral Zone a period of psychological adjustment and transformation; and

Assumption; Many managers believe, incorrectly, that once a change plan is implemented employees will fall in line.

Managing New Beginnings: embracing the new way of doing things and renewal.

Transition is the employees’ personal adjustment to change. Transition takes longer. It can be messy and challenges the manager’s skills to the limit. Performance, timetable and SLA slippages occur, as well as a wide array of employee behavioral responses occur because the change plan and employee transition responses are not aligned. Think of it this way. A composer’s well written music (the change plan) is only as good as how the conductor and players perform it (the transition).

To be highly effective, managers must understand that each phase requires different people management, coaching and communication competencies and tactics. They must know how to first engrave a “no going back” understanding in employees’ minds while ensuring the integrity of the past is maintained; dealing with a variety of resistance behaviors while leading transformation; setting goals, new processes, retraining and reengaging employees in the new mission.

How do people respond to change – basic principles?

If this is not enough, organizations continue to react quickly to the many external and internal change drivers for improved processes, controls and employee management.

1. They resist because they don’t like a change to their comfort zone. They experience loss. 2. They behave differently, based on their individual needs, experience, education, and attitude about the change. Transition is seen from the eye of the beholder. 3. They adjust to change at different speeds.

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initiated in an uncoordinated manner by various management levels at the company, the division, the section level. But usually no one has a high level perspective of all shotgun-like changes going on. As a result, employees and the organizational suffer change overload known as “transition deficit”. This is not good news for the organization because mental and physical energy and resilience drains. Recovery time is slow. Stress buckets overflow! It’s the high performing juggler dropping all objects because he was given one too many objects to juggle. Transition deficit impacts profitability and company performance because employee overload translates into poorer performance and customer service, higher stress absences and medical claims, lower company loyalty and higher attritions. This is not just front liners. This affects team leaders and managers, who are also personally adjusting to the change caught in the middle trying to meet demands of senior management and their team members. But team leaders are often not supported as they carry out this double load. Are you creating “perfect storm” conditions for supervisor turnover? One solution is get a handle on all changes by establishing a cross functional transition monitoring team, TMT, which maps and advises senior management on the change landscape ; and very importantly serves as a conduit for two way communications between management and employees. 2. Are your change planners, senior leaders and all employees aligned? Management often does not recognize the “marathon effect” Yes_No_?

1. Does your senior management require and receive a regular dashboard of all the current and planned changes to assist change planning Yes_No_?

Senior business leaders are like elite marathon runners, far in front of the rest of the organizational levels in their expectations of change implementation and outputs, the Marathon Effect. They expect all employees to fall in line and look after themselves on the “Go Live”

My experience is that changes are often

Continued on page 58>

Here is a quick change-transition management checkup.

August - October 2012

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<Continued from page 56 date. But the reality is that employees lag all over the change timeline because they are adjusting to the change at their own speed, often dealing with several changes at the same time. This difference between expectations creates frustration at all levels, change delays, client service concerns and cost over runs. 3. Do your managers understand “survivor syndrome” and how to treat it Yes_ No_? When restructuring causes employee terminations, the concerns of the “survivors” of the downsizing of go unattend-

munications plan to employees during changes, even when there is nothing to say. Yes_No_? Change announcements often come on short notice to employees and stakeholders, with “turn on a peso” directive. This really gets people frustrated, particularly if the change was a long time in planning and only a few people were informed. Endings, neutral zone and new beginning phases require different communication tactics and feedback loops. Leaders at all levels need to effectively and consistently show the change storyboard on how and when the promised land will be reached and who will get there and regularly updated. Do your team leaders know how to communicate a change effectively and to keep the team informed, even when there is nothing to say? 5. Are front line managers transition savvy Yes_No_?

ed. Organizations need them to maintain productivity but survivors suffer the same symptoms of transition because their comfort zone has been violated too; the organization is leaner and looks and feels different; the future looks more uncertain; teammates and lunch bunch are gone; promotion paths and opportunities are fewer; job security is now perceived as tenuous and future ability to provide for family threatened; relocation to the other end of Manila or another city is not an option. Survivors show anger, stress, envy, passivity, loss of commitment to the company, all leading to slippages in productivity, employee confidence and loyalty.

Many management training programs provide only very basic information on managing transition, the people side of change. They do not do a “deep dive” into understanding change driven behaviors and specific leadership competencies and techniques required to avoid or minimize the operational impacts and to manage transition successfully. These are the action people, the change implementers. For successful change they need to be expert engaged champions and leaders of change. If they are well trained, their own performance, job satisfaction and retention will be higher. The Bottom Line Business changes, large or small, will be significantly more successful and cost effective if a transition management plan is integrated with the master change strategy and implementation plan. It should include

So, effective transition management is needed to keep these key employees engaged, supported and performing productively.

1) How employees at all levels will be guided and supported through the change(s) and

4. Does management always prepare and roll out an ongoing effective com-

2) A comprehensive communication strategy.

58 Philippine Resources

Developing flexible, change and transition responsive managers and employees through transition training is an essential, cost effective, but underutilized, strategy to improve organizational change implementation, employee and operational performance, profitability and shareholder value. With thanks and acknowledgement to Wm. Bridges Leading Organizational Change materials and David Noer Healing the Wounds Bob Flecknell is a Philippine based, Senior Consultant-Training and HR with Profiles Asia Inc. Previous HR Director positions with APAC Customer Services (Philippines); Convergys (Canada); Service Zone-ClientLogic (Philippines). Director of Personnel, Acadia University, Nova Scotia, Canada; Holds a Bachelor of Science Degree, University of King’s College Nova Scotia CANADA and is a certified trainer with Achieve Global Inc. in delivering Leadership and Customer Services workshops and is a certified facilitator with William Bridges Managing Transition Programs. He has been a regular guest speaker at Philippines’ business groups and has guest lectured in Acadia University and Mount Allison University Canada business classes. Mr Flecknell can be reached at Mobile +632 0947 981 9574 or Email flecknell1@ yahoo.com ■

DON’T MISS OUT!! Issue 4 2012 of Philippine Resources is a media partner at the THREE listed Conferences/Expos, as well as Philippine Resources being handed out from our stand the magazine will also be in the satchels / show bags, which is a big bonus for all advertisers. 1) Annual National Mine Safety & Environment November 13-16 in Baguio 2) Upstream Energy 2012 November 14-16 in Manila 3) GEOCON 2012 (Geologists in Motion) December 11-12 in Manila

Advertise in Philippine Resources, the country’s Mining Petroleum and Energy Journal. Philippine Resources is read by the Advertising in Philippine Resources key decision-makers involved in the oil & offers an effective, cost-efficient way gas and mining sectors in the Philippines, to market your company’s brand, It’s written by specialists for specialists products and services to your buyers.

For circulation and advertising details, contact: Philippines: Cecilia Pamular Phone: Manila +63 920 967 8342 Email: cecille@philippine-resources.com

International Greg Brimble Email: greg@philippine-resources.com Phone: Perth +614 172 20759 Philippines +63 (0) 9949 338 3664

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Philippine Resources part of the community Advertisers’ Index ADEN 43 Aecom Philippines

Austhai Geophysical 21 Black Pearl (Business Profiles)

Brunel 34&35 Cardno 11 Chamber of Mines Philippines

DHL 41 Elliot Graphics

GHD

GXD 33 Hansa Meyer 7 Indodrill IBC Intertek 9 JCL International 15 Lomar

McConnell Dowell OBC Mayon Iron

Mining Expo Bagio

Monark 27 metso 3 Orica 2 Orion Projects

Outotec 55 Pacific Strategies 52 Paperless Trail 51 Philippine Mining Club Luncheon 53 Philippine Resources

PNG Resource 57 QED IFC Russell Mineral Equipment

Sandvik 17 SGS 1 Site Group 5 SMI 31 Survey Graphics 32 UPSTREAM Oil & Gas 37 Weir Minerals 29 60 Philippine Resources

August - October 2012

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Philippine Resources participating in a range of events

hilippine Resources is pleased to report it will be participating in three upcoming conference and exhibitions. As part of its program to expand the publication and its supporter’s presence within the country’s resources sector, Philippine Resources has made a commitment to support important industry events. The Philippine Resources’ team will be exhibiting at and attending the 59th Annual National Mine Safety and Environment Conference (ANMSEC) being staged at Baguio City from November 13-16. Hosted by the Philippine Mine New Philippine Resources team members Derek Safety and Environment As- Mullen and Steve Hill will be participating in the sociation (PMSEA), the theme various events. for this year’s event is “Responsible Mining: Our Advocacy… Our Com- highly successful PowerTrends exhibition, the largest biennial energy event in mitment.” the Philippines since 1995, UPSTREAM The Philippine Mine Safety and Environ- Energy has been launched as its own ment Association (PMSEA) is an organi- separate event. zation of mining companies, quarries, cement plants, suppliers, service con- Geocon 2012 tractors, professional organizations and government agencies that advocates a Philippine Resources will also be present national campaign against occupational at the Geological Society of the Philipsafety, health and environmental haz- pines’ Geocon 2012 event in December. ards of mining and its related operations. Being staged at the Dusit Thani Hotel Philippine Resources will also be partici- in Makati City on December 10 and 11, pating in the UPSTREAM Energy 2012 Geocon 2012 has a theme of “Geologists exhibition and conference, which will be in Motion. Responding to the Opportustaged at the SMX Convention Centre at nities and Challenges of our “Dynamic Earth” Pasay City from November 14 to 16. UPSTREAM Energy 2012 is an international energy event dedicated to the upstream sector of the industry in the Philippines. Previously incorporated in the

The Geological Society of the Philippines is a global geological community and the only accredited professional organization for geology professionals. ■