Philippine Resources Mining, Petroleum & Energy Journal Issue 1 2013, February - April
Leo and the miners lend a helping hand
Blast from the past
WESM and the Titantic
Red Mountain has golden touch at Batangas
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Front cover photo shows some of the recent drilling activity undertaken by Red Mountain near Batangas. The company has hit some exciting high-grade gold and silver intersections in recent months. See story page 36.
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The Long and Mining Road
8
Blast from the past
16 20
Looking at the Government’s Environmental Clearance Certificates The WESM and the Titanic
Resources Helping The People
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Leo and the Miners Lend a Helping Hand
Resource Stories
30
Chamber’s writing competition provides some powerful messaging
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Mineral Resources
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Red Mountain has a golden touch at Batangas
39
Cadan pours first gold at T’Boli
Global Support
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World Bank provides funding for Mindanao changes
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Philippine Resources Mining, Petroleum & Energy Journal Issue 1 2013 February - April 2013
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 greg@philippine-resources.com Journalist/Marketing Steve Hill Steve@philippine-resources.com +63 918 669 8611 Design/Production Elizabeth Galura Editor Colin Sandell-Hay Sales & Marketing Cecilia Pamular +63 920 967 8342 Contributors 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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The Long and Mining Road Dr. Walter Brown describes the challenges ahead for the Philippine mining industry to reach its potential.
A
t the November 2012 Philippine Mining Luncheon, one of the industry’s senior figures, Dr. Walter Brown, presented a sobering but persuasive account of the tasks ahead in tackling the political obstacles faced by the mining industry. His talk, entitled “Philippine Mining Industry: Prognosis and Possibilities”, aimed to “offer an analysis of the current status of the mining industry in the Philippines and make suggestions as to how to deal with recent developments”. He identified a dilemna. The government wanted to ensure full accounting of the social and economic costs and ensure that the country and locality benefitted fairly from mining. At the same time it admitted that it did not have the capacity to evaluate and regulate the industry. Resource management resources and law enforcement are inadequate, the memory of past environmental disasters remains, and also other sectors, especially OFW’s, are more central to the economy and government thinking. Dr. Brown outlined mining’s conflict issues listed by the Ateneo School of Goverment’s 2012 policy paper: land use, distribution of mining benefits, compensation for social and economic costs, risks and social acceptability, government ability to override local decisions and the costs of small-scale mining. The paper asked government for clear policy, more capacity and an action plan, and suggested that until the requisites were in place to monitor, assess and properly regulate the industry that there should be a moratorium on mining. Then he described how the House Bill 3763 aimed to protect local and indigenous people’s interests, and how the IMF Study Report 12/219 from June 2012 suggested that government’s share of revenue from mining should rise; taking into consideration these recommendations from Ateneo and IMF. The Executive Order 79 (EO79) imposed a moratorium on granting of new MPSA’s until the enabling legislation requested would be in place. EO79, the Tampakan ban, Philex spill and issues with small scale mining were all analysed. There were ambiguities, issues of implementation, and conflicts between central and local law, concern about new weather patterns on spillage, the legal treatment of “force majeure” and the need to bring small scale mines “into the fold”. Dr. Brown stated that despite the backdrop of inevitable growth in world demand for minerals, the NGO’s were well organised, informed and a number sincere, and were rightly concerned about the government’s ability to ensure good practice and equitable distribution. The result was a stalling of production and investment, fitting in with a long term boom/bust pattern. What is the solution? Dr. Brown suggested the need for more and accurate baseline information, national standards, community collaboration, building of alliances, along with a need for an industry champion, either from government ranks and/or academe. He or she has not been identified and unless such a person or group were to come to the forefront soon with the capacity and capability to change the current government position, the industry will continue to languish. ■
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Blast from the past: the myth of Velasco’s energy legacy By Fernando Penarroyo
O
f all the economic policies and programs initiated by the Marcos government, none has been much vilified and demonized than the energy development program implemented by former Energy Minister Geronimo Z. Velasco under Martial Law. What comes to mind as history judges the program are the accusations of corruption in the Bataan Nuclear Power Plant, alleged human rights violations in the Chico River Dam project, and the alleged lack of transparency in the awarding of government contracts with the appurtenant largesse to favored cronies. In Velasco’s memoirs contained in “Trailblazing: The Quest for Energy Self-
Reliance” (Anvil, 2006), he prided in the fact that he steered the state-owned Philippine National Oil Company (“PNOC”) during his stint as President and CEO to become the only Filipino-owned corporation ever to become listed on Fortune magazine’s Top 500 Companies outside the United States from 1978 to 1981. When the international consulting firm Arthur D. Little made an evaluation study funded by the Asian Development Bank for the Petroleum Authority of Thailand in 1985, among its recommendations was for the latter to follow the organizational pattern and system of PNOC. At the helm of the Ministry of Energy, Velasco earned the plaudit of the World Bank, which lauded the Philippine energy program as a model for Third World countries.
Martial Law and Velasco’s Energy Machinery Velasco admitted that he worked in a highly centralized decision-making and rigid political environment during Martial Law and it did not matter to him if he had to shortcut administrative processes to attain his single objective of reducing the country’s dependence on imported oil. Under the spectre of an oil shortage, President Marcos was able to impose rationing of oil products during the 1973 oil crisis by issuing General Order 41, directing PNOC to assume supervision over the sale and distribution of all available stocks of crude oil and oil products, whether imported or produced by the local oil refineries. Velasco used his closeness to President Marcos to allow PNOC to be exempted from civil service rules and government audit. In a span of six years, from 1974 to 1980, Velasco and his management team created twenty-three PNOC subsidiary companies that focused on three areas: petroleum refining and marketing; transport and logistics; and energy exploration and development, the creation of which in such a short time would not have been possible were it not for Martial Law. At PNOC, Velasco basically learned the ropes of energy diplomacy by negotiating government-to-government oil supply contracts with Saudi Arabia, Indonesia, United Arab Emirates and others, which was then perceived to reduce the nation’s reliance on oil being imported by the multinational oil companies. Velasco was so powerful then that he concurrently controlled a government energy regulatory agency and a state
Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law Offices. 8 Philippine Resources
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< Continued from page 8 energy machinery being regulated by the same regulatory agency. He believed that the centralization of decision making under the Marcos administration was conducive for building the energy infrastructure as quickly as possible, unlike the current democratic political system, which poses obstacles in planning, decision-making, and action. Oil Industry Special Fund Velasco was also able to have President Marcos establish a special fund of one centavo per liter imposed on the retail prices of petroleum products, to be used for energy development.
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In April 1974, the then Oil Industry Commission ruled that Php 0.01 per litre would be added to pump prices for the purpose of creating the Oil Industry Special Fund. The special fund helped PNOC finance the procurement of its tanker fleet and initiate projects related to energy exploration and development. In fact Velasco was able to convince an initially reluctant President Marcos to release Php 15 million from the Oil Industry Special Fund for the construction of the National Institute of Geological Sciences at the University of the Philippines (â&#x20AC;&#x153;UPâ&#x20AC;?).
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Velasco was able to make arrangement for the construction of a nonconventional energy research building in the UP Diliman area and in the process tapped the expertise of the UP College of Engineering. And Velasco was not even an alumnus of UP but of the Mapua Institute of Technology! Development of Technical Capability Velasco, being the visionary, recognized during that time that there was an appalling lack of consolidated data on different energy sources. He commissioned scientific and technical studies to aid the creation of a sysContinued on page 12 >
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<<Continued from page 10 tematic inventory of indigenous energy sources for oil, coal, geothermal, hydro and others.
join government and challenged these young idealists to contribute and enhance their knowledge in the quest for energy self-reliance. Hits and Misses
To be able to develop a comprehensive energy policy, Velasco believed that it was imperative to set up such an inventory. One of his legacies was the establishment of an Energy Data Center, which continues to be accessible to all stakeholders at the present Department of Energy. He also believed that PNOC should make a conscious effort to hire the country’s top geologists, engineers, physicists, and other scientists to help carry out his mission for energy independence. Velasco enticed scientists and technologists from UP, fresh from graduate studies in top international universities, to
Velasco most lasting legacy was generating power from geothermal energy, vaulting the country vaulted to the position of second largest producer. Of the alternative energy programs that the government embarked on in response to the oil crisis, geothermal development yielded the most substantial results in the shortest possible time. Velasco, realizing the importance of foreign risk capital, wanted to liberalize the entry of foreign firms and allow them full control of geothermal operations similar to upstream petroleum, instead of being limited to partnership with government or private local corporations. However, President Marcos disagreed
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and reminded Velasco that his agenda then was against the 1973 constitution. Velasco also accelerated the coal development program by requiring smallscale coal miners to unify their coal landholdings into sizeable coal blocks of at least 1,000 hectares, and enter into new operating contracts with the government patterned after petroleum service contracts. The program also called for the conversion of the fuel base of the cement industry from petroleum to coal and the establishment of a nationwide logistics system consisting of an infrastructure network of coal terminals, ports, relay stations, and blending and off-loading facilities. However, the alcogas and the coco-diesel programs were learning experiences for PNOC and the Ministry of Energy. Technical difficulties, access to raw materials and lack of economies of scale caused these projects to fizzle. The abrupt change in government, which caused policy discontinuity, also hastened the demise of the fuel substitute projects, as they required long lead times in the production process. In hindsight, Velasco understood the shortcomings of the projects but it was incomprehensible why PNOC did not learn the lesson when it later attempted to embark on a jatropa biofuel project. Ironically, it was two politically controversial projects of Velasco’s National Power Corporation (“NPC”) - the Bataan Nuclear Power Plant and Chico River Basin Development Project, which were partly instrumental in bringing down the Marcos government. Dismantling the Marcos Energy Infrastructure Velasco revealed that his greatest disappointment was that the hard work put in at PNOC and the Ministry of Energy went down the drain when President Continued on page 14 >
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<<Continued from page 12
have not done any better, undoing past achievements and prioritizing political Corazon Aquino, shortly after assuming careers in making decisions on energy the presidency, issued Executive Order matters. 20 abolishing the Ministry of Energy and placing all its attached offices, agencies, Former Energy Secretary to President and corporations under the administra- Fidel Ramos, Francisco Viray, takes extive supervision of the Office of the Presi- ception to Velasco’s statement that the post-Marcos administration did not have dent. a comprehensive energy development Velasco accused Cesar Buenaventura, plan. then the head of Anglo-Dutch Shell operations in the Philippines, of allegedly He argued that the plans and programs advising Mrs. Aquino to shut down the of the Ramos administration were built Ministry of Energy and close the nuclear on the achievement mentioned in Vefacility permanently because Velasco al- lasco’s memoirs by continuing the polileged that the nationalist policies under cies on the development of indigenous Marcos “threatened to erode the oil com- energy resources, renewable energy and energy conservation. panies’ position in the energy market.” Velasco blamed high energy prices and looming power shortages as the three biggest mistakes of President Marcos’s successors: the mothballing of the Bataan Nuclear Power Plant, the sale of Petron, and the break-up of NPC, which he believed “were rooted in lack of understanding and appreciation for energy issues, lack of foresight and, most important of all, provincialism in politics.” Mike Billington of the Executive Intelligence Review (2006) theorized that the hysteria induced at that time against the Marcos regime was to no small extent the result of an international campaign by neo-conservatives headed by the International Monetary Fund and the London/New York banking houses against nuclear power, aimed at undermining the energy independence of sovereign nations. Prof. Randy David, a self-professed opponent of the Bataan Nuclear Power Plant, writing his 2007 eulogy for Velasco in the Philippine Daily Inquirer, summed up Velasco’s memoir of the Marcos years as “not all about primitive accumulation through corruption but about the painful attempts of nameless public servants to expand the country’s productive base and build an economy based on modern industry and technology.” Velasco lamented that other presidents 14 Philippine Resources
More importantly Viray added, “the policy on deregulation and liberalization of the oil and power industry are policies called for in the current form of political governance” but which Velasco debunked in his memoirs as a ruse for the foreign control of sovereign nations. Lessons for Resources Bureaucrats Velasco reigned in an era where achievements are measured by barrels of oil produced and megawatts of electricity put on stream. He was neither a mouthpiece of private energy companies nor a slick power point presenter harping on energy contracts awarded and media-hyped bandaid solutions to power shortages and oil price hikes. He built a formidable team of highly educated technocrats and professional managers who scrutinized and vetted every data and information submitted by energy contractors to the government for possible flaws and misrepresentations. The Ministry of Energy on its own, produced data, information and reports, and did not rely entirely on what the service contractors submitted. Velasco and his team knew where they were going and how to get there.
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While present resource bureaucrats spend most of their time lobbying for the passage of investments laws and implementing policy rules, declaring them as achievements of their administrations, these were no big deal to Velasco. After all, he had the legislative backing of President Marcos under Martial Law! Understandably, the Martial Law energy machinery has its inherent flaws on issues of transparencies and accountability, and were prone to corruption. It would have been highly likely that it could have sputtered without a strongman at the helm. Velasco operated under a legal regime where there are no, or limited laws, on environment, social acceptability, indigenous peoples rights, protected areas, land access issues, local government devolution, which present resources bureaucrats have to contend with. In fact, most of environmental and social legislations were brought about by the abuses of the authoritarian regime. Perhaps, the private energy companies were not comfortable with the “incestuous” relationship between Velasco’s companies and the Ministry of Energy, which hastened the privatization of the state owned energy and power companies. Velasco himself admitted that any current move in an effort to make the direction of energy self-reliance significant must have to operate under a host of constraints that were not present in his time. Whatever Marcos’ “sins”, Velasco believed that the late president could claim energy development as a single achievement. We could hardly disagree. Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law Offices (fspenarroyo@punopenalaw.com). He specializes in Energy, Resources and Environmental Law, Business Development and Project Finance. He is a trustee of the International Geothermal Association, the National Geothermal Association of the Philippines and the Philippine Mineral Exploration Association. ■
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Looking at the Government’s Environmental Clearance Certificates By: Pacific Strategies & Assessments (PSA)
T
he Department of Environment and Natural Resources (DENR) and its attached agency, the Environmental Management Bureau (EMB), have issued only a handful of Environmental Compliance Certificates (ECCs) since President Noynoy Aquino assumed office in June 2010. A significant majority of the granted ECCs are for government projects, such as road construction. A few private business projects likewise require ECCs, but
these are for project expansions. The DENR and the EMB have not published the total number of ECC applications received since 2010. A quick check on EMB’s online database reveals that at least 300 ECC applications received by the bureau since 2010 are still in the process of “scoping / screening”. Out of this total figure, 127 ECC applications were filed in 2012. Securing an ECC is one of the Philippine government’s requirements for any entity, public or private, to undertake a project. This covers all projects that will
Continued on page 14 >
potentially and significantly affect the environment (see table on this page). The granting of an ECC suggests that such an undertaking will not cause any significant negative environmental impact and that the project’s proponent has complied with all of the government’s requirements. The rationale behind the policy is very clear and straightforward – to protect the environment. While the Aquino administration argues that all ECC applications are carefully reviewed and assessed, and compliance with environmental management plans are strictly monitored, many business projects – including big-ticket investments – have been stalled because of the government’s slow-paced approach to the ECC requirement. Worse, however, the Aquino administration, particularly DENR and EMB officials, have been accused of intentionally delaying approvals or outright rejecting applications. There are also allegations of corruption and bribery in securing an ECC. These issues have effectively politicized the already complicated ECC application and review process. While an ECC is usually associated with extractive firms, particularly mining, many other businesses require ECCs before they can operate. The ECC contains specific measures and conditions that must be met by the project proponent before and during the project’s operation. The ECC process typically follows six stages: (1) project screening, (2) EnviContinued on page 18>
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Resources Training Commentary Resources Commentary <Continued from page 16 ronmental Impact Assessment (EIA) study scoping, (3) EIA study conduct and preparation of report, (4) review and evaluation, (5) decision-making, and (6) environmental impact and monitoring. Among the numerous and complex requirements before an ECC is granted are: • Completion of a comprehensive EIA study • Proof of consultation with local government units (barangay or municipal/ city resolutions) • Proof of land jurisdiction/ownership over the project site (land titles) • Environmental track record (for expansion projects) • Proof of compatibility with the existing land use plan • A project environmental monitoring and audit prioritization scheme (environmental management plan)
ECC granting, however, has recently turned into a politicized process. There are allegations that the Aquino administration is using the ECC requirement to stop or derail projects, particularly in the mining industry. A number of bigticket mining investments, particularly in Mindanao, have been delayed due to rejected ECC applications. This is arguably one of the key reasons for declining mining investments in the Philippines. Mining investments from January to June 2012 were only US$160 million, down by more than 50% compared to investments in the first half of 2011. The DENR cited the erroneous process used by project proponents as one of the key reasons for the ECC approval delay. However, DENR and EMB officials have been accused of showing bias in approving projects. Local government units (LGUs) and nongovernmental organizations (NGOs) reportedly exert undue influence over the review committee,
Tampakan Copper-Gold Mine Project
I
n January 2012, the DENR denied Sagittarius Mines, Inc.’s (SMI) environmental compliance certificate (ECC) application for its Tampakan Copper-Gold Mine Project in the provinces of Sarangani, Sultan Kudarat, Davao del Sur, and South Cotabato. The mining firm appealed the DENR decision. In May 2012, the DENR denied the appeal, arguing that the ECC application was rejected on the basis of an existing – albeit illegal –open-pit mining ban in South Cotabato. The mining firm noted that it has complied with all the government requirements and an independent review committee has even recommended issuing an ECC. Recently, the Department of Justice (DOJ) issued a legal opinion on the South Cotabato open-pit mining ban, citing that there is no provision in the Philippine Mining Act that prohibits such process. The DOJ opinion also noted that the Department of Interior and Local Government (DILG) could file administrative sanctions for grave abuse of authority and misconduct against local officials who issue illegal ordinances. In December 2012, the Mining Industry Coordinating Council (MICC) endorsed the granting of an ECC to SMI. The Tampakan Copper-Gold Mine Project is worth US$5.9 billion, and could potentially be the biggest single investment in the Philippines. ■
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resulting in the rejection of ECC applications. Particularly in Mindanao, there are reports that some unscrupulous small-scale miners and illegal loggers can easily purchase ECCs from local officials and regional DENR and EMB officials. The ECC has also been confused with other permits and approval processes, effectively creating confusion and politicizing the process. In the past, the DENR has rejected an ECC application on the sole basis of an existing and contradicting local resolution, confusing this with failure to secure approval during consultation with local officials. Moreover, the ECC has also been confused with free prior and informed consent (FPIC), which is used to obtain indigenous peoples’ (IPs) approval for use of their ancestral domain. The DENR has reportedly rejected applications based on a failure to obtain an FPIC, which is an entirely different process. In the end, the Aquino administration has to ensure that it is not only exercising its political responsibility in protecting the environment, but it is also encouraging a healthy and viable business environment. More importantly, it has to clearly outline its environmental policies and regulations and show that no one is above these government laws. As it is, the government’s handling of the ECC requirement is proving costly to businesses and consequently turning off investors. ■
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The WESM and the Titanic
T
he year 2012 was the 100th anniversary of the sinking of the Titanic. Plenty of recent articles have highlighted this tragic event as a reminder of the need to exercise care and judgment in making decisions when everything appears to be going well. In this article we discuss the iceberg that is floating around in the waters off the Philippine coast: Is electricity reform, like the Titanic, going to sink before it reaches its destination? The Philippine electricity industry reforms started in 2001 with legislation known as the EPIRA. Much has been achieved since then. The WESM has been established in Luzon and the Visayas; most of National Power Corporation’s (NPC’s) assets have been privatised, and some new generation has been built. Two final planks of the reform are open access and retail competition. The destination of electricity reform can be
described as a fully sustainable electricity industry, without reliance on Government guarantees or intervention. The contestable activities of retail and generation would be entirely commercially based. Continued on opposite page>
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Open Access (RCOA), which is scheduled to begin commercial operations on 26 June 2013 after a raft of delays. While RCOA will allow reforms to reach more and more customers, it will not solve one of the fundamental challenges facing the market: regulation.
Mindanao split into private investorowned utilities (PIOUs, such as Meralco), not-for-profit distribution cooperatives (ECs) and local government-owned utilities (LGUOUs).
While the “big end” of town has been reformed, most consumers still deal exclusively with their local distribution utility, which, outside of Metro Manila, is likely to be a regional Electric Cooperative. Prices for most consumers are still regulated by the ERC.
Clearly, in Luzon the market is dominated by Meralco – noted by most observers The nature of electricity regulation in the as “the only credit worthy counterparty Philippines affects all parts of the elec- in the market”. Why is this? tricity supply value chain – from generation to retail. In some instances, the The sheer size of Meralco is part of the way regulation is applied makes existing answer, but for the rest we need to dig problems worse rather than better, as we deeper into the structure of the ECs and how they are regulated. Most ECs are discuss below. small and cover a small geographic reWhile there are many issues that require gion. Some struggle to collect revenues attention, two are particularly pertinent and pay debts. to ensuring new generation continues to be built in the market: That of contracts These are not problems unique to the underpinning power station new-builds Philippines—collection challenges and and the credit-worthiness of the counter- non-technical losses are issues in many developing countries—but problems are parties signing those contracts.
The next wave of reform to hit the WESM will be Retail Competition and
Figure 1 highlights the market share by peak demand of Luzon, the Visayas and
Continued on page 22>
<Continued from opposite page The natural monopolies of distribution and transmission would still be regulated, of course. The forces of supply and demand would signal and support new build in generation. Consumers would pay the retailer of their choice a cost-reflective but reasonable and competitively determined electricity price. We are, as yet, quite some way from that destination.
Philippine Resources 21
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as the responsibility to manage an overall supply contract portfolio for a price slightly more than the minimum in the market, saving the EC the cost of joining the WESM in the bargain.
Figure 1: Market share by peak demand of Luzon, Visayas and Mindanao. Source: DOE DDP 2010 – 2019
<Continued from page 21 compounded in the Philippines by the EC structure as enshrined in their charters The “not-for-profit” nature of these ECs, together with strict “cost only” pass-through regulation, mean that the ECs can neither save for rainy day nor conserve surplus funds for expenses such as force majeure allowances or the costs of security deposits and prudential requirements. Unlike many regulatory frameworks that allow normal operating expenses to be passed through, the regulatory environment in the Philippines is such that even funding the prudential requirement needed to join the market is a struggle for some. Some are unable to meet the credit security requirements necessary to enable them to participate in longterm contracts. Of the 86 ECs in Luzon and the Visayas; 17 are not even members of the WESM. The smaller ECs are simply not set up to be attractive counterparties for contracts in a market-based environment such as the WESM. No international bank will lend to new power projects underwritten by contracts with a non credit worthy EC, and we understand that even local banks need something extra to lend to EC contracted projects (such as the Sinosure involvement in GN Power). So, while Meralco may be seen as creditworthy, it only supplies 55 percent of peak demand. The other 45 percent of the market also needs new power stations to be built to meet growing demand. The situation is especially challenging in the Visayas and in Mindanao. Figure 1 shows how these regions are sup22 Philippine Resources
plied primarily by ECs. Furthermore, in Mindanao, there is no spot market to fall back on in the event an EC has over- or under-contracted. Unfortunately, the regulator’s (ERC’s) contract approval process worsens the situation. A quick count of work-in-progress cases on the ERC website suggests that 26 approvals of Power Supply Agreements (PSAs) are outstanding from 2005-09 (18 from 2009). The ERC does not appear to evaluate contracting and EC cost structures and risk management capacity holistically, nor does it appear to differentiate between when it is necessary to regulate outcomes and when it is better to regulate the processes by which outcomes are achieved. Instead, the ERC seems to examine each contract on a case-by-case basis. This may seem admirable, but it results in costly delays and evidences a fundamental disconnect between the ERC as regulator and the WESM as competitive market. The ERC has approved contracts based on a “cost-plus” concept. As a result, the ERC has disallowed a number of contracts negotiated in the competitive market environment. For example, Trans-Asia offered to supply energy sourced from the market and other suppliers to BATELEC II, a direct EC who did not wish to be exposed to WESM spot prices. Trans-Asia offered BATELEC II the prevailing NPC “Time of Use” rate plus a two percent margin. In exchange, Trans-Asia, a private sector company, proposed to take the risk associated with WESM price volatility as well
The ERC disallowed the two percent uplift – effectively forcing Trans-Asia to supply BATELEC II at the same price as the government-owned NPC, whose prices have no reason to necessarily be right. This highlights a potentially serious lack of recognition of risk/reward trade-offs inherent in energy contracting and a poor understanding of the role aggregators can play in the market. In another example, Green Core Geothermal signed a number of contracts for the sale of the output from Palinpinon and Tongonan in the Visayas. However, in its latest contracts with CENECO and VECO (two utilities operating in the Visayas), the proposed steam price differed from what it had been in some earlier contracts. The ERC ruled that there was “no reason to deviate from the previously approved fuel fee” – ignoring, it would seem, commercial realities or other matters that might have affected two different negotiated outcomes that took place at different points in time. Of the pricing terms in 15 contracts in Luzon submitted to the ERC for approval in 2011, over 25 percent were reduced in some way and none were increased. Either the ERC is overlooking commercial realities and applying a relatively heavy-handed regulatory hammer or the ERC is failing to deal constructively with the underlying problem. After all, if so many commercially negotiated contracts are turning out to be inappropriate in the ERC’s view, then something more significant is wrong, and the ERC should be providing guidance or pointing the way towards a solution. The ERC’s focus on specific outcomes rather than on constructive regulation and approval of process is a significant risk to the WESM, one that has already Continued on page 24>
Resource Commentary
Continued on page 26> had a negative impact. In Mindanao a group of ECs came together for the very first time to run an innovative and major tender for 300MW of new baseload generation capacity. While there were a number of issues that caused the failure of this particular tender process, a major problem was that the ERC did not provide the ECs with any form of “in-principle” regulatory approval prior to the bid. As the bid was to be competitively tendered, the key economic issue should have been whether the tender was wellstructured and whether the level of competition would have been sufficient to establish a credible outcome. In short, the key economic regulatory issue concerns the process. But this is not how the ERC approached the situation, consequently fostering perceptions of significant regulatory risk. Bidders were required to incur substantial expense to submit compliant tenders, including the expense of evaluating the opportunity and developing their proposals and meeting the various requirements. The cost and financial commitments required to prepare and submit compliant tenders for competitively tendered power opportunities can run into the millions of dollars. Yet, the ERC provided no assurance that it would approve the winning bidder’s proposal. What is the point of using a competitive process if the regulatory focus is going to be on the outcome rather than on the process itself? Indeed, how is it possible to evaluate an outcome of a competitive process without considering first and foremost whether the process was itself suitably competitive! And, if it is deemed competitive, then what is the logic of reserving the right to alter the outcome after the fact? If bid participants expect such risk, then they will either not participate (which is what happened in this instance in Mindanao) 24 Philippine Resources
or they will strive to incorporate their best estimates of regulatory risk in their bids, raising costs. An economic regulator needs to be seen as supporting competitive processes and providing clear guidance as to what constitutes appropriate processes. When every outcome is to be separately adjudicated, the process slows down, investors lose interest, competition weakens and investment is delayed. Such outcomes in the dynamic Philippine economy would be tantamount to the WESM hitting an iceberg. Banks are also increasingly aware of the risks faced by their clients and can be expected to limit access to funding accordingly. The amount of equity required to support a project is a function of, among other things, the amount of debt that banks will provide, and the terms of that debt. If banks make less financing available, equity must step in to plug the gap for projects to go ahead. Regulatory risk increases the costs of projects. For retail competition and open access to succeed, retailers need sufficient financial headroom to be able to manage risk efficiently. These are some of the reasons we argue that the Philippine WESM faces an iceberg of growing demand that may not be met by a corresponding growth in supply. If impact occurs, like the Titanic, it will be too late to change course and the reform could be doomed to sink in a sea of urgent new-build directed by Government and most likely funded by it too: exactly as occurred in the late 80’s and 90’s resulting in the current fleet of over-priced power purchase agreements that have caused NPC and PSALM such losses. However, the WESM need not hit an iceberg. Relatively modest changes in the direction of regulation such that the ERC focuses more on promoting and ensuring appropriate incentives and processes
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rather than on reviewing and revising so many commercial contracts. Streamlined processes that focus on what is important and valuable contribute to increased security of supply by reducing delay and project risk. There are other potential benefits to regulatory streamlining and refocusing. At the start of electricity reform in New Zealand, some 60 electricity supply authorities (distribution companies) served a population of less than four million people. New Zealand avoided many of the problems we see in the Philippines, however. New Zealand’s regulatory framework was once famously known for its commitment to a “light-handed” regulatory regime known, colloquially, as the “threat of regulation”. While regulatory developments in New Zealand have moved beyond those old “light-handed” days, New Zealand has retained a commitment to incentive-oriented regulation rather than line-itemreview regulation. When distribution and retail functions were formally separated, the regulatory framework for the industry as a whole facilitated a number of mergers, creating a more cost-efficient industry over time. The purpose of the EPIRA was to foster economic efficiency and improvement in the electricity sector. But regulation is like the hand of the Captain on the tiller of the Titanic – we would not have expected Captain Smith to change direction as each wave passed the bow but rather to set a course and check it periodically to be sure the way forward is clear. This is not what is happening. The EPIRA reform in the Philippines is, like the Titanic, a marvel to behold. A functioning electricity market in a developing country is a rare and precious achievement; one worth saving from the depths. ■ The author Sarah Fairhurst, is a Partner with The Lantau Group.
Resources Helping The People
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Leo and the Miners Lend a Helping Hand L
eo Dominguez, senior mining lawyer, industry expert and EMCEE of the Philippine Mining Luncheons speaks about how miners have always led the way in relief and rescue operations, how mining could rebuild lives in Compostela Valley, the significance of Bangsamoro and Malaysia, Land Rovers, and what to do with old advertising tarpaulins!
and Pusong Minero. Our other sponsors included AirAsia, Angel Brigade, the Land Rover Club of the Philippines, Resource Advisors, Marco Polo Davao Hotel and Geo Projects. The backbone of the volunteer group was a team of doctors and paramedics from Malaysia - the Elite 4X4 Search and Rescue Squad.”
The following is a recent interview with Leo conducyed by Philippine Resources’ Steve Hill.
Leo: “Typhoon Pablo blew down 16,000 hectares of banana plantations, and thousands of hectares of coconut and oil palm trees. According to Mayor Rey Navarro of Laak, in his municipality it could probably take up to three years to bring back the level of economic activity that existed there just before the typhoon.
Steve: “Hello Leo, what’s that jazzy orange tee-shirt you’re wearing?” Leo: “Well I just got back from Project Helping Hand in Mindanao’s Compostela Valley – or “ComVal” as we locals call it! I’m from Davao and I recently took part in a medical mission for victims of Typhoon Bopha / Pablo – which devastated the area. “The badges on the volunteer tee-shirt represent the groups and companies that supported our medical mission. Our main ground sponsor was St. Augustine Copper and Gold Limited of the Kingking Copper Gold Project in Pantukan
Steve: “Is help still needed?”
“I suspect it’s worse in some other areas of ComVal and Davao Oriental. It’s made worse by the reluctance of some landowners to replant bananas because of the Panama Disease, a fungus that spreads with flood waters and which is very bad for Cavendish bananas. The national government will need to step up its expenditure, especially when World Food Programme aid stops around February or March.”
Leo Dominguez, senior mining lawyer, industry expert and EMCEE of the Philippine Mining Luncheons.
Steve: “What are the alternatives to banana farming?” Leo “I joined an aerial survey of the typhoon-devastated areas in December. In the airplane with us was an agronomist and I took the opportunity to ask him. “He said cacao was a possible alternative to bananas, and so is oil palm. The trouble is that both take at least 3-4 years to produce a crop and income. What do the people live on while they wait?” Steve: “Well, forgive me for stating the obvious, but wouldn’t mining help?” Leo: “Yes, responsible mining projects could help tremendously. ComVal and Davao Oriental are quite mineralized. Potentially substantial projects, like Kingking, Apex and other projects nearby when they take off, would generate jobs not only in mining, but also in building roads, bridges, dams, housing, hospitals and schools.” Continued on page 28>
26 Philippine Resources
Resources Helping The People
< Continued from page 26 Steve: “What mining is taking place locally now?” Leo: “It is clear that one of the main industries in ComVal is small-scale mining. Much of it is illegal and therefore unregulated. They are environmentally damaging and dangerous to the miners themselves. We don’t know how many died in these mines in the floods during Typhoon Pablo. “We would see more lasting benefit and less tragic loss of life if we had safer and responsible well-regulated large scale mines. People should recognize that if an area is mineralized, like ComVal, experience shows that no amount of government regulation or NGO intervention will stop illegal mining from taking place there. “Wouldn’t the better approach be for the national government to place the development of these mineral resources with responsible large-scale mining companies that will not only provide long-term employment for the community, but also pay proper taxes, provide hospitals, schools and infrastructure that could serve the community well beyond the life of the mines?”
Steve: “Let’s go back to disaster relief and who was involved in the Pablo relief operation.” Leo: “We got some fantastic help from companies and individuals. AirAsia sponsored 13 Malaysian volunteers from KL to Clark, along with Filipino volunteers from Clark to Davao and back. “Angel Brigade, along with a generous donation from Zuellig Pharma, provided medicines; St. Augustine Copper and Gold provided ground transportation, hotel accommodation in Tagum City, coordination with the Provincial and Municipal governments, and additional local doctors and nurses; members of the Disaster Assistance Rescue Team of Davao provided excellent ground coordination; Resource Advisors provided financial help; the Land Rover Club of the Philippines provided coordination and vehicles, Sarangani Governor Miguel Dominguez made available a Land Rover Defender 110 of his province to help transport medicines and volunteers; GeoProjects and Pusong Minero provided volunteers and other valuable support; Marco Polo Davao provided accommodation on the final night of the mission; the Department of Tourism organized a brief but meaningful tour of Davao City before the team checked in at the Davao airport.
Steve: “Is that message getting across?” Leo: “It will eventually, and there is some evidence of a change in attitude. Damage to farming could accelerate that.”
28 Philippine Resources
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“The Malaysian Consul in Davao City went out of his way to meet the Malaysian volunteers upon their arrival in Davao City to give them a briefing on the disaster and how Malaysia has been helping Typhoon Pablo victims, about Malaysia’s renewed interest in investing in Mindanao - particularly in the Autonomous Region of Muslim Mindanao which, thanks
Sarangani Governor Miguel Dominguez made available a Land Rover Defender 110.
to the Bangsamoro Framework Agreement that the Malaysian Prime Minister had helped to forge, is now open for business. “The Consul also attended the final dinner to express words of gratitude to the volunteers and the sponsors for their work. The Consul also led the volunteers proudly chant their national motto “Malaysia boleh!” (meaning “Malaysia can!”) “We had the good fortune to have Ambassador Delia Domingo with us for two days. Drawing from her rich diplomatic experience, including her role as Director General of ASEAN, she enlightened us by pointing out that the mission was not only about a few Malaysian volunteers helping typhoon victims in ComVal, but it was about Malaysia lending a helping hand to the Philippines when help was most needed, and over and above that it was about weaving further the tapestry of ASEAN Cooperation. Steve: “Didn’t you find that displaced families needed something that had been thrown away?” Leo: “Yes – strange as it may seem, discarded advertising tarpaulins, including massive billboard tarps weighing 200-300 kilos apiece, can provide much needed temporary shelter and temporary classrooms for typhoon victims. The Philippine Franchise Association facilitated the donation of tarpaulins from its members, including 2,400 tarpaulins from Globe Telecom. Century Tuna donated three large billboard tarps. Continued on opposite page >
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<Continued from opposite page NYK Shipping generously donated the transportation of these tarps, as well as medicines and other relief goods, from Manila to Davao City for deployment by Pusong Minero to where they are needed. Just think of the high visibility that these tarpaulins give of the donors’ CSR in action!”
Steve: “Who are the groups involved – members know our vehicles are often starting with the Land Rover Club. Why the only ones that can get to inaccessible did they get involved?” places, and we are happy to use them to take relief goods and volunteers to such Leo: “I’m an enthusiast, as is Air Asia places. Some vehicles go faster, but Land Philippines boss, Maan Hontiveros. Our Land Rover Club of the Philippines Continued on page 30 >
Steve: “So you need more tarps?” Leo: “Yes please! Santa Fe Relocators have agreed to store as many as we need, and deliver them to AirAsia or NYK for free shipment to Davao City.” Steve: “I saw that the Malaysians were active too.” Leo: “Yes, they sent 13 medical volunteers – whose round trip air transportation from KL to Clark and Clark to Davao was generously sponsored by AirAsia. Not only where they able to conduct a medical mission in ComVal, but they also put to good use their training and experience as they participated in the rescue of people stranded in their homes during a flood in Davao City.” Steve: “Why were the Malaysians so involved?” Leo: “I guess three reasons, apart from their undoubted humanitarian commitment. Firstly, the strong ties with the Land Rover Club of the Philippines developed during a medical mission to Hagonoy just after the Habagat downpour in August 2012. Secondly, I think the positive outlook arising from the Bangsamoro Framework Agreement, thanks to the commendable efforts of Philippine Ambassador to KL, Eduardo Malaya, in promoting the business opportunities that have arisen from the Framework Agreement, has placed Mindanao more top of mind among Malaysians. Thirdly, they probably see a strong connection between a more economically vibrant Mindanao and lasting peace and prosperity - coming for the mission in some way helped this process.
Philippine Resources 29
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Chamber’s writing competition provides some powerful messaging T
he Chamber of Mines of the Philippines recently staged a very succesful “Faces of Mining: A Short Story - Writing Competition”. A Total of 105 entries were received from all over the country, out of which the judges shortlisted 27 entries. This is the winning entry “Bagong Uso, Pagtatanim ng Damo” submitted by Ms. Hazel Pastera Abela. Bagong Uso, Pagtatanim ng Damo Kahapon...
“Posible bang may pamilya sa Palawan na mas mahirap pa kaysa daga?” Posible dahil mayroon ganoon! Mas mahirap pa sa daga ang pamilya namin ! Mas mabuti pa nga ang mga daga dahil sagana sila sa pagkain. Sa pamilya namin, kulang na kulang ang pagkain na inihahain ni Inay sa siyam na bibig naming lahat na nakapaikot sa pagkakaupo sa sahig sa tuwing kainan na! May madadagdag pa sa Setyembre.Huwag lang sana maging kambal!
<Continued from page 29
Steve: “And Pusong Minero?”
Rovers go anywhere! A Land Rover bumper sticker says it all: “Don’t follow me. You won’t make it!”
Leo: “Pusong Minero traces its roots back to the spontaneous actions of miners in digging out survivors in the 1990 Baguio earthquake and in subsequent landslides such as in Real, Quezon and in Leyte, and typhoons such as Reming, Ondoy and Sendong, over the years. This was coordinated by the Philippine Mine Safety and Environment Association (PMSEA) and its Safety Networking Action Program (SNAP), earlier under the auspices of then PMSEA President Ernie Rodriguez.
Steve: “And the Angel Brigade? Do they ride Harley Davidson bikes?” Leo: “Ha ha – not exactly. The Angel Brigade was started by Tisha Bautista, Ariel and Judith Roda and a handful of wellmeaning individuals right after Ondoy struck Luzon in 2009. They solicited and re-packed relief goods for distribution to flood affected areas around and near Manila. A few members of the Land Rover Club volunteered to transport these relief goods to these flooded areas. “As more floods and typhoons hit, the Angel Brigade continued to help and their numbers and supporters grew. In December 2011, Tropical Storm Sendong hit Cagayan De Oro and Iligan badly. This was when Angel Brigade and the Land Rover Club joined forces to help out Pusong Minero’s relief efforts, with focus on Iligan. For Typhoon Pablo, an expanded Angel Brigade Collective - a coalition of many partners, including Pusong Minero, Land Rover Club, NYK, Santa Fe Relocators, Habitat for Humanity, Lapanday, Sagabay sa Dabaw and others - is working to help the typhoon victims. 30 Philippine Resources
“Now, under the leadership of PMSEA’s current President Louie Sarmiento, SNAP has evolved to what is now known as Pusong Minero. The miners always react quickly and often with great courage in digging out people trapped or rescuing isolated survivors. The arrival of Sendong in December 2011, barely a month after Pusong Minero was launched at the annual PMSEA Conference in Baguio, immediately put it to the test. With Typhoon Pablo, Pusong Minero is again willingly put to the test.” Steve: “But what does “Pusong Minero” actually mean?” Leo: “I think it’s a great name – it means “Heart of the Miner”. It means both the body and the soul – the physical well-
“ Bakit naman po kasi sa hirap na kabuhayan natin,Itay, naging marami pa kaming magkakapatid?” Minsan naitanong ko nang masinsinan sa aking ama. Bungtong-hininga lamang ang unang tugon niya. “Malalaman mo rin yan, Zaldy kapag nag-asawa ka na.” “Ako? Kapag nag-asawa, ipa-plano namin nang maayos ang bilang at pagitan ng aming magiging mga anak.” Naibulong ko talaga sa aking sarili. Continued on page 32 >
being of our miners and their continuing courage in helping others. In other words our Filipino miners have a courageous heart, a concerned heart, a compassionate heart – truly, a heart of gold.” Steve: “I agree – it’s very appropriate. So what’s your last message about your experience in rescue and relief?” Leo: “Firstly, the generous support of a wide range of individuals and companies has been heart warming and exemplary. However to me, speaking to this magazine, the main point is that miners and mining companies have been doing their best in the short term to assist victims of natural disasters who are in dire need. In the long term, their responsible mining projects can provide the economic opportunities, employment and income to rebuild damaged lives.” Steve: “Very eloquent – you should be a preacher.” Leo: “Ha ha - the Church has enough problems already. I might just add to them.” To find out more about Operation Helping Hand, Pusong Minero and how you can assist in rescue and relief, please contact steve@philippine-resources.com. ■
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Resource Stories
<Continued from page 30 ”Bago dumating iyon, mag-tatapos muna ako ng pag-aaral.”Libre naman ang mangarap eh. Palibhasa, ako ang panganay, ako ang katuwang sa pagpapasan ng bigat ng paghahanapbuhay. Sabi nila, matalinong anak daw ang panganay ni Mang Victor. Marami nga ang nanghihinayang dahil kailangan kong huminto sa pag-aaral upang makatulong na maitawid sa gutom ang aking mga kapatid. Damangdama ko ang hirap ng buhay. Nangunguha kami ng mga yantok sa gubat. Ginagawa naming duyan, basket at iba’t ibang lalagyan. Itinitinda sa mga tabuan. Masaya na kung makapagbenta kahit ilang piraso man lamang. May maipambibili na ng bigas, asin at isda. Lalong masaya sana kung makabili pa ng kape at asukal. Sinubukan din naming mag-ama ang pagsasaka. Hindi umubra! Bago pa magsimulang umandar ang thresher, naandyan na ang truck na pagmamay-ari ng pinagkautangan ng binhi, ng abono at ng pamuksa sa insekto . Kulang pa ang inani na pambayad sa nagastos. Mabuti pa nga sabi ang mga daga. Marami pa silang nakakain sa palay na hindi sila ang nagtatanim. Kaya tinularan na lang namin ang mga daga. Nanganganihan na lamang kami sa ibang sakahan. Sigurado pa sa partihan, maliit nga lang. “Itay! Magtatanim na lang po ako ng damo!” Humahangos pa akong hinahakbang ang hagdan ng aming halos malugmok na na bahay. Dumalo ako sa pagpupulong na isinagawa doon sa Linangan. Palibhasa nasasabik ako sa mga impormasyon, gustung-gusto ko na dumalo sa mga isinasagawang Information and Education Communication (IEC) ng Coral Bay Nickel Corp o CBNC. Gusto kong makinig sa mga nagsasalita doon. May pa-merienda na, may natututunan pa. “Ano? Magtatanim ka ng damo? Eh sa palayan nga natin, pinupuksa natin ang mga salot na damong iyan! Tapos ngayon, magtatanim ka ng damo!” Naalimpungatan ang Itay ko. 32 Philippine Resources
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“Opo! Kikita ako sa pagtatanim ng damo! Kailangan daw po nila ng mga tao na magtatanim ng mga damo. Iyon po ang paliwanag ng namumuno sa Environment Management and Quality Control Section o EMQCS doon sa IEC na pinanggalingan ko. May mga lugar pala doon sa minesite na dating ginagamit na dam kung saan iniimbak ang tubig na may mga latak. Tailings Storage Facility #1 ang tawag doon. Kapag hindi na ginagamit ang mga iyon, nagiging malawak na lupaing nakatiwangwang, kulay pula at wala nang pakinabang. Wala na kasing mga halaman ang maaring tumubo doon. Nakikita daw pala sa panghimpapawid na camera ang damage na iyon. Pangit na pangit daw po tingnan!” Alam nyo po, Itay, hinding-hindi pala iyon matatanggap ng kompanya na pabayaan nang gayon na lamang. Responsableng kompanya kasi ang CBNC. Gumagawa sila ng mga eksperimento at mga estratehiya kung papaanong mapanumbalik ang buhay doon sa tailings dam. Gusto talaga nilang patunayan na responsable sila sa kalikasan!” “Napakalaki nga daw ng hamon sa kanila. Una, ang pagpapatibay sa pisikal na anyo ng lupain sa slopes ng dam; ikalawa, ang gawing katanggap-tanggap na tanawin lalo na sa paningin ng mga kritiko ; ikatlo, ang gawin itong kapakipakinabang o produktibo; at pang-apat, ang pagpapanatilili nito sa napanumbalik o sa rehabilitated na kalagayan. “Hus! Zaldy, bata ka! Kay rami-rami mong nalalaman! Sana nga lang, sa talino mong iyan, makapagpatuloy ka sana sa iyong pag-aaral. Kailan daw tayo maaaring magsimula?” Ngayon... Kasama ang maraming ka-barangay, kami ng Itay ko ay sumasakay sa truck patungong tailings dam araw-araw at sama-samang inilalapat ang mga kaparaanan na pinag-aralang mabuti ng EMQCS upang mapanumbalik ang buhay sa lupain na nakatiwangwang at tila wala ng pag-asa na mapakinabangan at upang patuloy na mapangalagaan ang kapaligiran. Sina Atong, Bobby at Carling ay kasama
sa pangkat na nagtatanim ng mga damo at mga halamang-bagin na mabilis lumalago sa kabuuan ng slopes ng dam na halos labing limang ektarya ang nasasakop. Ginagawa nila ito upang tumibay ang lupa, makaiwas sa ano mang pagguho at pagtagas. Ang galing nilang tingnan. Naka-harness pa habang bumababa at nagtatanim; parang mga stuntmen sa shooting ng pelikula. Sina Dante, Ely at Fernan ay kasama sa mga tagapangalap ng mga buto ng punong-kahoy at iba pang pananim na tulad ng saging mula sa mga kalapitbarangay. Binibili ang mga ito upang itanim ng mga kalalakihan sa kabuuan ng lupain na halos walumpong ektarya na dati ay tila nakikita lang sa ibang planeta dahil sa kulay na pula. Sina Aling Gina at Ate Helen ay ilan lang sa mga kababaihan na sumasali na rin sa pagtatanim. Sila ang nagpapasaya sa mga biruan. May ilan na nakatalaga sa mga halamang-gamot at sa mga bulaklak na pananim. Karamihan ay nagtatanim ng damo. Sina Insiong, Jose at Kardo ang nakatalaga sa gulayan.Kay rami-raming upo, sitaw, kalabasa, ampalaya at iba pang gulay na nabanggit sa awiting Bahay Kubo. Sina Luding, Marcelino at Narcing ang mga alalay sa gumagawa ng eksperimentong palayan sa minahan. Nakamamangha na umaani sila ng malaki! Gusto ko ngang gayahin ang sistema nila sa aming sariling bukirin. Maaari palang magsaka nang hindi gumagamit ng artipisyal na mga pataba sa lupa. Nasa nursery naman sina Oscar, Pedring at Quintin, sila ang tagapagpunla ng mga punong-kahoy na namumunga tulad ng mangga, langka, guyabano, durian at iba pa. Pang-fruit cocktail naman ang bida! Nagagawang tumubo ang mga nasabing panamim dahil sa mga estratehiya na isinasagawa upang magkaroon muli ng masaganang nutrisyon ang lupa. Si Ruding ang tagapangasiwa sa mga kalalakihan sa pagsusunog ng ipa na mula sa mga gilingan ng palay. Ginagawa nila itong carbonized rice hull bilang sangContinued on page 34 >
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Geothermal energy risk management
<Continued from page 32
kap sa ginagawang organic fertilizer. Sina Santos at Turo ang nangangalaga By Fernando Penarroyo sa vermi culture o mga bulate na gumagawa ng pataba ng lupa. Si 63 natural 1C@@3<B na 7<2CAB@G /<2 >=:7B7 Mang Ulding, Wally at 6/A Yayong ang mga 1/: :/<2A1/>3 =>3<32 => tagahakot ng dayami4=@ at dumi ng baka na >=@BC<7B73A 1:3/<3@ 3<3@5G inihahalo paggawa ng compost. =>B7=<A sa E67:3 7<D3AB=@A /<2 5=D3@< ;3<B @35C:/B=@A 3<23/D=@ B= >@=D723 Dahil sa sadyang7<4@/AB@C1BC@3 masisipag kamiA3@D713A ni Itay, B63 3AA3<B7/: pinapakyaw namin angB= pagtatanim at /<2 :35/: 4@/;3E=@9 23D3:=> /<2 pagpapatubo damo sa mga supot na 23>:=G <3E ng 3<3@5G B316<=:=573A nasidlan ng pinatabangA=;3 lupa =4 sa paraang 34=@3 1=<A723@7<5 B63 93G natural. Inaalagaan namin ang mga ito @7A9A E6716 6/D3 /< 7;>/1B =< @3<3E ng pagdidilig hanggan /<2 sa maaari nang /0:3 3<3@5G >@=831BA B63 53<3@/: ilipattanimB= sa>@=>3@ lupa. Malaki ang kinikita />>@=/16 /AA3AA;3<B 7B 7A namin kaysa CA34C: saB= ganitong 723<B74G sistema 0/@@73@A B6/B mag/@3 arawan. Kumikita ang bawat isa sa amin >@3D3<B7<5 B63 C>B/93 =4 ' >@=831BA ng humigit-kumulang na sampung libo =@3;=AB =4 B63A3 /@3 0/@@73@A E6716 ng pisoB= sa B63 bawat buwan.P20,000 sa am@3:/B3 :=E :3D3: =4 /E/@3<3AA ing dalawa ni Itay! Wala naman kaming C<23@AB/<27<5 /<2 /BB3<B7=< /44=@232 bisyo, maliban na lang sa mainit na kape, B= B63 1=;>:3F /@@/G =4 >=:71G @35C:/ ngayon may creamer na. /<2 =@5/<7 B=@G B316<71/: 47</<17<5 H/B7=</: 4/1B=@A /4431B7<5 ' >@=831BA Kaya naman, lagi-lagi nagpapa 3=B63@;/: >@=831B kaming 47</<17<5 7A <=B B63 BG>71/: 0=7:3@>:/B3 A163;3 E7B6
T
totoo kung gaano kabuti ang Panginoon sa buhay namin mag-ama at sa aming mga kabarangay. Nagiging katuwang na kami sa pangangalaga ng kapaligiran, >@= 4=@;/ /5@33;3<BA CB7:7H32 7< =B6 natutulungan din kami sa aming kabu3@ @3A=C@13 >@=831B 23D3:=>;3<B hayan! <D3AB=@A /@3 37B63@ :/@53 /<2 B@/ 27B7=</: 3<3@5G A3@D713 1=;>/<73A B6/B Bukas... 6/D3 B63 /07:7BG B= 47</<13 ' 7<D3AB ;3<BA 7< B316<=:=5G =@ >@=831BA 4C<2 Katulad lupain sa tailings dam0/A7A na dati 32 =< / ng <=< @31=C@A3 47</<13 =@ ay nakatiwangwang, ang buhay namin A;/::3@ 0CB 3<B@3>@3<3C@7/: 53=B63@;/: bukasmakalawa ay higit nang 4=@ matibay 23D3:=>3@A A3397<5 7<D3AB=@A B316 at may pag-asa. <=:=5G ' /<2 =@ >@=831B 47</<13 =@ B63A3 3<B@3>@3<3C@7/: 53=B63@;/: Tulad ng unang layon na papagtibayin 23D3:=>;3<B 47@;A B63@3 /@3 27443@3<B ang slopes ng dam, titibay din kami la0CA7<3AA ;=23:A /<2 0/:/<13 A633B A3< ban sa ano mang pagsubok ng buhay. A7B7D7B73A B= 1=<A723@ Hindi na kami madaling gumuho. Higit ,67:3 47</<17/: 7<AB7BCB7=<A 1/@3 na naming napatunayan na?C/:7471/B7=< may biyay4C::G 3D/:C/B3 23D3:=>3@ ang sa mga nagsusumikap. /<2 laan B@/19 @31=@2 037<5 / ;/8=@ /<2 E3:: 9<=E< 23D3:=>3@ 7A <=B @3?C7@32 Patungkol sa layon na@31=5<7H3 maging katang031/CA3 47</<173@A 7<D3AB gap-tanggap sa paningin? Higit pa dyan ;3<B =>>=@BC<7B73A 6/D7<5 1=<A723@/0:3 ang maaaring akin at>@=8 sa 3F>3@73<13 7< mangyari 23D3:=>7<5 sa3<3@5G aming lahat. Higit na matatamis na ang 31BA 0G >@=D727<5 3?C7BG =E3D3@ <3E mga ngiti dahil sa tiwala /@3 na nagmumula 53=B63@;/: 23D3:=>3@A @3?C7@32 B= 23;=<AB@/B3 B637@ 1=;>3B3<1G 0G A3
sa kalooban na kakayanin pala namin na paangatin ang buhay mula sa paghihikahos. Dagdag pa dyan, malapit nang matapos ang ginagawa bahay. :31B7<5 3F>3@73<132 /<2 naming E3:: @3A>31B32 Yero ang atip,/<2 mayA>3174G7<5 matibay na/<2 dingding 1=<AC:B/<BA CA7<5 at sahig. Nakahanda na rin ang kurtina 3?C7>;3<B E7B6 >@=D3< B@/19 @31=@2 para sa mga74 pinto bintana. #=AB <=B at /:: mga 1/>7B/: >@7=@ B= / 53=B63@;/: >@=831B A >@=D3< 43/A707:7BG Produktibong kabuhayan? Mayroon na! 7A 2=<3 B6@=C56 3?C7BG /<2 <=B 230B 7 Marami na kaming alagang baboy at ma</<17<5 =4 3F>:=@/B7=< /<2 1=<47@;/B7=< nok. Kanya-kanyang alaga ang mga kapa2@7::7<5 CAC/::G 1=;3A 4@=; 1=;>/<G 3? tid ko. Ang Inay ko ang supervisor nila. C7BG =@ @7A9 1/>7B/: >@=D7232 0G 7<D3AB=@A Sa bawat maiibenta, sasapat na sa pan 3<3@/::G 7<D3AB;3<B 7A A=C@132 4@=; gangailangan sa eskwela. na siA332 1/>7B/: nila D3<BC@3 1/>7B/: Lagi =@ 3?C7BG lang may mababaon, hindi tulad ko noon 47</<17<5 4=@ / 53=B63@;/: 23D3:=>3@ na laging kumakalam ang sikmura ngu C3 B= B63 6756 @7A9 7<D=:D32 E7B6 53= nit hindi 3F>:=@/B7=< man lang makapunta sa<=B kantina B63@;/: 0/<9A 2= >@= upang mag-meryenda. D723 4C<27<5 B6@=C56 :=/<A C<B7: B63 :/B3@ AB/53A 7< B63 23D3:=>;3<B >@=13AA Sa ng self-sustainability? Kakaya layon C@7<5 B63 1@7B71/: @3A=C@13 723< nin! Mapapanatili patuloy ko pang /7;A maB7471/B7=< >6/A3 oB63 23D3:=>3@ hihigitan ng;C16 aking 7<4=@;/B7=< mga kasamahan ang B= =0B/7< at/A /A >=A ginagawa namin na pagpapanumbalik sa A70:3 /0=CB >=B3<B7/: @3A=C@13A E67:3 lugar ng tailings dam. Makatutuklas pa 7<D3AB=@ 1=ABA /@3 :=E >@=D727<5 B63 23D3:=>3@ E7B6 / AB@=<53@ 4=C<2/B7=< Continued on opposite page> Continued on page 32 >
Brunel loc FP
34 Philippine Resources
Philippine Resources 31
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Renewable Resources Mineral Resources Resource Stories
government and est program are <Continued from opposite page N. Ar/0A07:;809? ,> >3:=?0= ;=:50.? ;0=4:/> tunay na Ginto - Ms. Chrisa sector. PhilexMae Mining’s <private Continued from page 32 Dreamsopera- Ms. B:@7/ =0/@.0 @9.0=?,49?D 1:= ;:74.D ,9/ nobit; A Home Built with In other Padcal ng mga bagong estratehiya pamunu- The more/D9,84.> than 100 entries for the “Faces Papel in ng the Tagum:9 , 14C0/ B4?3 ang ;0=1:=8,9.0 8,=60? B309 8:/07492 0.: Melanie Joy G. Claro;tions awards for>.30/@70 2011, mean ng EMQCS sa ano mang hamon na of Mining: A Short Story - Writing Com- pay - Ms. Janice T. Acosta; Ang Mundo sa 2@,=,9?00> ,9/ 74<@4/,?0/ /,8,20> 1:= 9:84. =0?@=9> safest mine tallic category, ibibigay kanila.toKasama kami sa pagla- petition” were short listed ,=0 to 27..3,=,.?0= The fol- Mata ni Ignoy MaalamHolcim - Ms. Evangeline ?30 1,47@=0 :1 ,..0;?,9.0 ?0>?> ,9/ ?480 0:?30=8,7 ;=:50.?> awards sawent La Union lapat iyon. lowing is the list of shortlisted entries C. Farnazo; Earth Diggers Ms.the Shelda 7D .:884>>4:9492 4E0/ -D >429414.,9? @;1=:9? .,;4?,7 49A0>? TVI ng mga Resource plant- in nonthe winners: The Faces of Mining P. Capiral; Angel of Mine - Ms. Cecille A. D e v#=:50.? 809? 1:= 0C;7:=,?4:9 B077 /=477492 ,9/ ?30 e l o p m 149,9.0 e n t s 4> ,7>: 34237D /0 and metallic categoHumudyat na?30 ang alas-singko! Hayan na -49>?,77,?4:9 Mr. Antonio L. Langaoan, Sr.; Mining ;09/09? :9 ;:B0= ;@=.3,>0 ,2=00 :1 ;7,9? ,9/ 0<@4;809? @? Calleja; Ten Trees - Ms. for surface opry,Abigail MRL Pastera Gold’s ang truck...Repubis for ?30 Me!20:?30=8,7 - Ms. Efer ;=:50.?> Jhan Margarett S. Abela; Not a GeologistSurigao-Agusan Blog - Ms. Nikki 809? ## 0C0.@?0/ -0?B009 ?30 /0A07 :9.0 ,=0 ;7,.0/ eration, Nierras - Honorable Mention; Bagong Ann C. Estrada; The Beauty of a Paradox :;0= ,9/ ;@=.3,>492 09/ @>0= ?D;4.,77D 49 .:880=.4,7 :;0=,?4:9 ?30 1@07 >:@=.0 lic Cement Buprojects in the “Oppss...Tulad ng dati! mag- Uso, Pagtatanim ng Damo - Ms. Hazel - Ms. Christine Grace D. Ruta; Kapalaran ,9 070.?=4.,7 @?474?D &30 Walang ## ;=:A4/0> 4> >0.@=0 1:= ?30 /0.,/0> :1 0C;0.?0/ 7410 lacan for cement exploration catuunahan pag-akyat! Alphabetical ang Pastera Abela - 1st Place Winner; Posible - Ms. Rhealyn Cordivillo; The Promise of 1:= ?30 >,70 :1 .,;,.4?D ,9/ 090=2D ,? ,9 ?480 B4?3 , >?0,/D =0A09@0 >?=0,8 plant saoperaegory, with speResource Development, represented byReynaldo its president Eugene Mateo (secondBeyond from Mining pagkasunud-sunod!” sa Palawan Mr. Bong Dela Wealth Mr. Ronald C. ,2=00/ ;=4.0 ;=4.0 >?=@.?@=0 ,9/ >;0.4 ? 4> 2::/ ?: 9:?0 ?3,? ?=,/4?4:9,7 tion, Apo Land TVI cial awards for right) and chief operating officer John Ridsdel (far right), won the award for the safest mining Rosa; Mr.awards Edmond Sungkaling - mineral Asignacion; The Faces Apex of Hope inMining Punta 140/ ?480 ;0=4:/ 9 ,//4?4:9 ?30 149,9 49>@=,9.0 ;=:/@.?> ,=0 9:B -0.:8492 and Quarry for operation as well as safest mine for Sawasi surface operation and processing (concentrator categories). They Ang received the ni awards LouieVirsil Omacand “.4,7 Nge! Zaldy? Ako laging, huli! Di Untitle; Saging Lolo from - Ms.PMSEA Roye- president Naga - Mr. Flaminiano; Car49>?4?@?4:9 B477 ang 49.7@/0 .,=01@7 8:=0 ,A,47,-70 ?: ?30 $ 49/@>?=D B3470 quarry operaRio Tuba Sarmiento (far left) and Mines and Geosciences Bureau director Leo Jasareno (second bale, sa?30 pagmamayabang, nangunlyn A. Carnain; Miniminang Pagmamana ried Throught Homeward: My Father ,9,7D>4> 49?0=.:990.?4:9 >?@/40> 90B 149,9.4,7 =4>6 8,9,20809? 49>?=@ tion,hindi FCF:1 MinerNickel Mining from left), with awards committee member Lita Lee (center) of Rapid City Realty and guna naman ang pangalan ko sa laki ng -809?> ,=0 0A:7A492 !0A0=?3070>> ?30=0 Ms. Lourdes M. Dela Vega RN - 2nd as a SIngle Parent and Mine nursery Worker ,9/ ?=,9>84>>4:9 ,2=00809?> =:8 ?30 als for explorafora best Development Corporation. kinikita pakyawan...” Place Winner; Nanay Edwina - Ms. - Ms. Jennifer C. Mayapit; Re-entering =4>6 ;0=>;0.?4A0 3:B0A0= 4? 4> ;=010=,-70 4> , 900/ 1:= Si .@>?:84E,?4:9 :1 .:A0= tion sa (category and best rehaA. Carnain Special processRecogni- the Light - Me. Andreirespectively. G. Inso - 3rd Place ?3,? 0.:9:84.> ,9/ /08,9/ 1:= ;:B0= ,20 ,9/ 74960/ ;=:/@.?> ?3,? ;=:A4/0 , A), MRL Gold Surigao-Agusan for Roselyn Mining Service for -mineral bilitation strategy “Tayo na at excited na sa billing!” Tulad tion; My Love Affair Mining - Ms. The Gold that Grows in was the /=4A0 ;=:50.?> =,?30= ?3,9 .:9?=,.? ;=: ?:?,7 >:7@?4:9 1:= ?30 with =4>6> 4930=09? 49 Winner; exploration (category B), Repubing (crushing plant category). PMSEA’s Pasasalamat Award ko, ay masaya. Ito yongfor pagkuha na Nimfa B. Calera - Honorable Mention; - Mr. upon Jason N. Ostrea Mines and A4>4:9> 7>: .:9?=,.?> 902:?4,?0/ B4?3 20:?30=8,7 /0A07:;809? 20: lic lahat Cement Norzagaray mineral Carmen Copper was )3470 cited for Mines conferred former ng sweldo namin dito sa taniman ng pera, - Ms. Rosemarie R. Northern Bernardi04?30= >4/0 -0492 ,? , /4>,/A,9?,20 ,=0 , ?30=8,7 090=2D B477 .:9?49@0 ?: 1,.0 Geosciences Bureau director and Deprocessing (cement category), TVI Kartolina safest combined operation, este ng mga Development halaman pala. ■for mineral no; The Threee Mamanwa Women Ms. We thank “Ronnie” theEnvironment Chamber for and allowing us .,@>0 :1 .:9.0=9 1:= 709/0=> :->?,.70> ?: 2,49 49A0>?809? 8,=60? ,. Resource Cement for most improved safety- perpartment of Natural Fernando Penarroyo is the managing at Puno and Penarroyo Timbancaya-Urbanek; Miners’ Kids to reprint partner theundersecretary results of this very worth processing !00/70>> ?: >,D >?=0,8749492 ?30 Jane .0;?,9.0 ,9/ ,;;74.,?4:9 ?30=0 4> =::8 (concentrator category), formance and TVI Resource DevelopResources Jerry DoLaw Offices (www.punopenalaw.com). He it Big - ,> Clares B. Gumingin; Ang while exercise. ■ and resources ;0=84? ;=:.0>> for -D mineral 2:A0=9809? =02@7, Make 1:= :;?484>8 ?30 @>0 :1 ?34> 090=2D Apex Mining processing ment for safest mining operation. lino for his contributions to uplifting specializes in energy law, ?:=> B477 3,A0 ,9 48;,.? :9 20:?30=8,7 (extraction category) and Philippine >:@=.0 4> :97D -02499492 ■ Awardees for the best mining for- project the Philippine mining industry. ■ finance and business development.
Shortlisted entries
Brunel Ovs FP
Philippine Philippine Resources Resources 35 33 25
Mineral Resources
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Red Mountain has a golden touch at Batangas Western Australian-headquartered
explorer Red Mountain Mining Limited continues to build up an impressive high-grade gold story with its Lobo Prospect within its Batangas gold project, located 100 kilometres south of Manila.
The ASX-listed gold explorer announced in early February that it had encountered new drilling intersections on the West Drift epithermal lode system and it continues to define a high-grade gold shoot the Lobo prospect.
In a promising development for Red Mountain, the new drilling has also indicated there is potential for the grade at Lobo to increase with depth. The three new drilling returns from West Drift including LB-70 that intersected 6.3m @ 8.03 g/t Au from 197.8m depth downhole (est. true width 5.6m); including 4m @ 11.18 g/t Au. This is the deepest high-grade intersection on West Drift to date, further confirming the trend of increasing gold grade with depth. A second diamond drillhole LB-68, located 25m south of LB-70, intersected 4.9m @ 4.47 g/t Au from 177.5m depth downhole (est. true width 3.8m); including 1.55m @ 7.37 g/t Au. In addition, LB-68 intersected a new lode which produced a very high-grade quartz-sulphide â&#x20AC;&#x153;silver lodeâ&#x20AC;? intersection of 1.5m @ 499.4 g/t silver (Ag); including 0.5m @ 1,488 g/t Ag from 43.4m down hole independent of the gold lode. The new silver lode is shallow dipping, has now been mapped at surface and is open along strike. Sampling of the silver lode at surface and in other drillholes intersecting the lode has been completed and results are expected shortly. Red Mountain Executive Chairman, Neil Warburton, said the high-grade gold and low copper intersection in LB-70 is very significant as the results indicate the transition to a low sulphidation zone generally associated with higher-grade gold deposits. â&#x20AC;&#x153;The new drilling is defining a highgrade gold-shoot that is open at depth, and to the east and west.
Red Mountain has been undertaking a very active and successful drilling program. 36 Philippine Resources
Continued on page 38>
Mineral Resources <Continued from page 36 “Drilling will continue with two rigs to test what is now a >500m long zone that appears to plunge shallowly to the west, as the company continues to focus on growing and increasing the grade of its resource inventory at Batangas. “The intersection of high-grade silver
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at shallow levels is an exciting bonus, that will be followed up over the coming months with further sampling and drilling.” In other new results recently announced by Red Mountain, a second drilling rig deployed early in January to test the strike extent of West Lode, centred 100m north of LB-70, produced an intersection in LB-69 of 2.05m @ 3.51 g/t Au from 198.35m downhole.
These three new gold intersections are part of a drilling program by Red Mountain at West Drift to target high grade gold mineralization below the old Lobo copper mine and potentially convert the gold Red Mountain Executive Chairman, Neil Warburton, third from mineralisation to left in blue, in the Red Mountain core house.
38 Philippine Resources
mineral resource inventory in accordance with the JORC Code. To date, more than 10 kilometres strike-length of epithermal vein-breccia structures have been mapped at Lobo. Previous drilling has only tested approximately a 500 metre strike length of the interpreted 10 kilometres strike length of mapped and interpreted lode structures at Lobo, to shallow depth of less than 150 metres. High-grade gold shoots have been identified at South West Breccia (Indicated Resource of 178,000 t @ 7.4 g/t Au 42,0000oz Au and Inferred Resource of 16,000 tonnes @ 5.3 g/t Au; 3,000 oz Au) and now at the West Drift prospect. Red Mountain Mining has achieved signbificant instant success after the company only completed the acquisition of its gold resources and copper gold tenements in the Philippines in late October 2012. ■
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Cadan pours first gold at T’Boli V
ancouver-headquartered Cadan Resources Corporation had an early Christmas celebration when it achieved its first gold pour at the T’Boli gold-silver mine at South Cotabato. The first gold bars were poured at the TMC owned carbon-in-leach (CIL) processing plant in T’Boli and the T’’Boli CIL plant milled 1,881 dry metric tons (DMT) of mineralised rock from existing stockpiles. With assays of 98% Au, and weighing a total of 316oz, the average grade of gold produced from 1,881 DMT was 5.2g Au/ DMT. Additionally, 497oz of silver were recovered; the average grade of silver produced from the 1,881 DMT was 8.2g Ag/DMT. The average prices for the metal sold
were CAD $1,680/oz Au and CAD $32.50/oz Ag for a combined recovery of CAD $547,032. “Cadan’’s first gold pour is a fantastic milestone, reaching over half a million dollars in metal value. This confirms the mill is operational. We are very excited about what we have achieved,” Cadan’’s President and CEO, Robert Butchart, said. The mineralized rock stockpile was predominantly derived from the development of drives along veins in preparation of stopping operations during 2011 and 2012.
The first of these drives is scheduled to commence mining operations during the first quarter of 2013, with daily production rates scheduled to rise up to 200t per day. ■
Philippine Resources 39
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World Bank provides funding for Mindanao changes
T
he World Bank says an additional 65 villages in 21 conflictaffected towns of Mindanao will have access to funds for livelihood and small-scale infrastructure to help speed up reconstruction and create small businesses and jobs in these wartorn communities. The assistance is made possible with the recent approval of a US$5.251 million additional grant for the Mindanao Trust Fund (MTF) that is designed to help improve social and economic recovery in these parts of Southern Philippines. Secretary Teresita Quintos Deles of the Office of the Presidential Adviser on the Peace Process (OPAPP) said that the additional financing for the MTF will help the country’s efforts to heal, rehabilitate and develop conflict-affected areas. It will also strengthen the constituency for peace and citizen’s participation on the ground, she said. “We welcome the additional support that adds to the government’s efforts to empower conflict-vulnerable communities in their quest for a peaceful and progressive life. We hope that this mechanism
40 Philippine Resources
will continue to bridge goodwill and trust not just between the parties on the peace table, but also with the communities on the ground that we serve,” added Secretary Deles. The World Bank and other international development partners established the MTF in 2006 as a mechanism for pooling funds and coordinating support for conflict-affected areas in Mindanao. So far, the MTF has completed 240 reconstruction and development projects, including classrooms, health stations, access roads, water supply systems, core shelters and community centers in 154 conflict-affected communities in 75 municipalities across Mindanao. Under the program, residents of these communities choose and implement their own projects that enable them to recover from the conflict and improve their living conditions. Besides funding projects identified by communities, part of the grant will be channeled through the International Labour Organization to support livelihood activities. It will also provide skills train-
ing to help people secure steady employment. World Bank Country Director Motoo Konishi said the additional financing comes at a critical juncture in the country’s history. The recently signed Framework Agreement on Bangsamoro, he said, underscores the importance of intensifying socio-economic assistance to communities that have suffered from decades-old conflict. “This additional funding means that while the Government and the MILF flesh out the details of the Framework Agreement on the negotiating table, the program will continue to deliver much needed services to conflict-affected communities,” Mr. Konishi said. The World Bank is joined by several development partners which support the MTF, including the European Union, the Swedish International Development Cooperation Agency, the United States Agency for International Development, the Australian Agency for International Development, the New Zealand Ministry of Foreign Affairs and Trade, and the Continued on page 42>
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US group supports Philippine UN move A US congressional delegation has put its weight behind a Philippine push to bring the West Philippine Sea dispute to the United Nations arbitral tribunal to resolve the issue peacefully. The US delegation headed by Rep. Ed Royce of California recently met President Benigno S. Aquino III in a courtesy call. Congressman Ed Royce was joined by Representatives Tom Marino of Pennsyl<Continued from page 40 Canadian International Development Agency. The MTF works through the Bangsamoro Development Agency (BDA), the development arm of the Moro Islamic Liberation Front (MILF), whose mandate is to determine, lead and manage relief,
vania, Vernon Buchanan of Florida, Matt Salmon of Arizona, and Eliot Engel of the 16th District of New York.
The President explained why the Philippine wishes to bring the issue to the arbitral tribunal.
“The US delegation supported the position of the President in bringing the dispute to the UN arbitral tribunal, consistent with our policy of maintaining a peaceful resolution to the West Philippine Sea dispute,” Presidential spokesman Edwin Lacierda said in a press conference in Malacanang.
Aside from discussing the West Philippine Sea issue, the President also mentioned the Philippine economy to the visiting US delegation, particularly the country’s strong stock market.
rehabilitation and development projects in conflict-affected areas in Mindanao.
ment Agency.
“The MTF serves an important confidence-building role in bringing the government and the MILF together on development issues affecting the Bangsamoro,” said Dr. Saffrullah M. Dipatuan, Chairman, Bangsamoro Develop-
The American delegation expressed strong confidence in the Philippines economy. ■
“The additional financing will boost our efforts to build the capacity of the BDA so that the MILF will have a core of technical experts in development on whom to draw following a peace agreement with the government.” ■
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High profile speakers ensure Luncheons attract strong attendances audience. “We will do everything in our capacity to assist the communities that have been affected by the spillage in Padcal Mine,” Toledo said.
T
here was a another very strong turnout when the Philippine Mining Luncheon had the pleasure to have Atty. Michael Toledo, SVP for Corporate Affairs from Philex Mining Corporation at its October event. Atty. Toledo explained the Philex stance on the Padcal tailings dam spill to the
Operations at Padcal Mine were suspended on August 1, 2012 when there was an accidental leak in the Tailings There was another big turnout when Atty. Michael Toledo (left) Pond No. 3 follow- presented to the Philippine Mining Luncheon in October. ing heavy rains. Since the October presentation Philex has done a great deal of work to rectify the problem and are looking at recommencing operation mid this year, full credit to Philex as one of the country’s leading mining operations and the professional manner in which they reacted to the situation.
Future outlook presented at November luncheon At the November 23 Philippine Mining Luncheon, Dr. Walter Brown, Chairman of A Brown Company, gave a presentation onthe future outlook of Mining in the Philippines (see this month’s commentary, page 6) Dr. Brown, with over 45 years’ experience in the mining industry in the Philippines, spoke about the effects of EO79, the government’s view on the progress of the industry which may have left some of the attendees wondering when things will really pick up for the mining industry here. It was an insight that has to be respected from a person with so much knowledge about the workings of Government and the people associated with mining.
International visitors Pieter and Eugene from South African firm Afromix, with Mark Lund of Site Skills Training Phils, attended the November luncheon. 44 Philippine Resources
Craig Ritchie from Intertek and Stephanie from ANZ Banking.
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Luncheon snapshots
Peter Wallace, Ambassador Delia DomingoAlbert and Anthony Weymouth of Austrade enjoyed the October Mining Luncheon.
Ms Kamonwalee Chaichanawirote, Ryan Carains (Austhai) with Brad Hoadley (GXD Supply)and, Gerard McNeill from Austhai Geophysical & Geotechnical Services.
Jocelyn Velarde presents November speaker Dr. Walter Brown with a thank you gift.
Cris Acosta, Filminera Mining and Ed Castro and Malcolm Boyd of JAMMPL with Cecilia Pamular from Philippine Resources Magazine at the November luncheon.
Shane Oâ&#x20AC;&#x2122; Sullivan from Site Skills and Robert Nivison from Lockforce Inc Phils.
Chris Sabin Sydney Mining Club, Shanna De Guzman and Graeme Deegan from Resource Advisors,Voytek Kawecki of Javelin Associates (Second Right)
Philippine Resources 45
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Australia and Philippines celebrate local shipbuilding craft A
ustralian Ambassador to the Philippines, Bill Tweddell, recently highlighted Filipino shipbuilding capabilities, citing the industry in the Philippines as “world class” and an important contributor to economic activity and jobs generation. The Ambassador also welcomed President Benigno Aquino III’s commitment to make it easier for companies, including from Australia, to grow the shopbuilding industry and provide employers with access to a highly-skilled Filipino workforce.
The Austal Philippines Shipyard on Cebu.
President Aquino made these comments during the recent formal opening of the local subsidiary of Australian company Austal Philippines Shipyard Operations at the West Cebu Industrial Park in Balamban town.
“Coupled with the dedicated and skilled Philippines workforce, I am confident Austal Philippines will continue to expand and grow.”
The new operation is Austal’s third – it has existing facilities in Western Australia and the United States. “Australia is focused on innovation – it is this innovation that Austal has brought to Cebu – and to the Philippines. It brings cutting edge technology to help
the Philippines further develop its shipbuilding and manufacturing industries,” Ambassador Tweddell said.
Austal Philippines has already finished construction of one ship bound for Europe while four more ships are scheduled to be finished before the end of the year, bringing in a total of US$70 million and providing jobs to nearly 300 Filipinos. Austal has also invested an additional US$4.8 million to improve the Cebu facility.
Philippine President, His Excellency, Benigno Aquino III, was a special guest at the official opening ceremony for Austal Philippines Shipyard Operations at the West Cebu Industrial Park. 46 Philippine Resources
Austal designs and constructs aluminium vessels, including passenger and freight ferries, luxury yachts, and military vessels. For its operations in Cebu, Austal committed US$15 million to develop a world-class, high technology manufacturing operation in the area, an investment that is bringing Filipino shipbuilding to the world stage. The Philippines has grown into the fourth largest shipbuilding country in the world, with ship exports in 2011 reaching US$638 million -- a 57.9 percent increase from the previous year. “The opening of Austal Philippines comes at a time when the long-standing relationship between the Philippines and Australia is deepening. Two-way trade is valued at approximately A$3 billion per annum, and our people to people links are stronger than ever,” Ambassador Tweddell said. There are also now more than 200 Australian companies with a significant presence in the Philippines covering a range of sectors, including engineering, construction, banking, mining, BPO and education. Shipbuilding may just be among the next sunshine industries and I congratulate Cebu and the men and women of Austal Philippines for being in the thick of things and giving the industry a boost.” ■
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Managing Operations and Improving Performance
W
hen the financial crisis hit in the autumn of 2008, it put many investment decisions on hold. “Let’s wait and see what this means for our sector and for my company in particular”, was a common reaction among business leaders. As early as the first quarter of 2011, however, this started to change to: “We cannot afford to wait any longer, we must act”.
period of increasing turnover and good profits there is a tendency to add costs, especially people and their accompanying bureaucracy. When times change and turnover is no longer increasing those inflated fixed costs become a burden and, typically, staff numbers are reduced. Usually, the direct labor force is the first to be trimmed. The second phase of cost
Streamlining production productively
For a company like Mantec, of course, this was exactly the news it wanted.
The challenge of streamlining production, increasing productivity, make it lean, eliminating work in progress and reducing stock is much more appealing. Whatever the solutions, it is almost always easier to achieve results when a company is in trouble because everyone knows they need to improve and they are more open to change. But as we know, everybody loves change as long as it affects other people. For ”me” to change you must give me a good reason.
Its close collaboration with its clients, management consultancy Mantec conducts a thorough analysis of client companies and proposes detailed programs for improving productivity and profitability. Typically Mantec provides focus on the Operational Excellence, time as full time professional project staff and a proven method to bring about the bottom line improvements to the client. It must be remembered that every time a managerial position is removed, the entire communication structure changes. For a number of years prior to the current financial crisis, the challenge Mantec was most often presented with by is clients, was to help them produce more volume to cope with expanding demand. Since 2009, however, Mantec projects reflected the need to reduce costs, slim organizations down, and to reduce inventory and work in progress. Working capital and cash flow were top of the agenda – businesses needed cash and they needed it now.
cutting is often achieved by ”cheese slicing” 10% off the workforce in all departments, which often just makes the whole organization more difficult to manage without improving effectiveness. It is important to carefully analyze all activities to define what is necessary (and what is not) then determine the volume of work at the various positions. If this process is not undertaken, even a 10% cut might create critical weaknesses. Furthermore, it must be remembered that every time a managerial position is removed, the entire communication structure changes. This needs to be handled carefully, or frustration, misunderstandings and reduced productivity may well follow.
Slimming down the healthy way When a company experiences a long 48 Philippine Resources
bad. For the people in the organization waiting to hear where the axe will fall, it is naturally very stressful. Ultimately, the options for easing the pain while the labor review is underway are limited, but can and should be used to shorten the time to determine the requirement. This will make it easier for an organization to recover more quickly from the trauma of a major redundancy program.
Reducing labor is always tough; you take away people’s livelihoods and it feels
Everybody loves change as long as it affects other people; for ”me” to change you must give me a good reason Shop-floor productivity is typically more about working with behavior and some basic management principles, than about new methods known by magic three letter acronyms. In Mantec’s experience it is very seldom effective to simply implement a method into an “as is” operation: every business, every business unit, is different and needs something that is tailor made to the specific organization and its people. The method might have been proven, but if you do not have the people or don’t train them, or fail to sell the idea, then the new doctrine is of very little, if any, value. Continued on opposite page >
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< Continued from opposite page Mantec believes in always trying to make things as simple as possible and taking the easy steps first. Indeed preferably all improvements will be effected in small steps. Every time something changes, there is a risk. By taking many, small steps the consequences of an unfortunate leap are limited. Small steps on the understanding that every change will need adjustment encourage co-operative participation within the client organization. Otherwise a failure at the beginning of a program carries the risk that the organization may start to doubt whole the process. On the other hand, showing that there is improvement and giving the organization the credit will inspire creativity. For a consultancy like Mantec, it is important to work in partnership with the customer: their people have the knowledge about products, markets, customers and suppliers. We need to work together
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as team to get good, sustainable results. When Mantec takes on a project we tell our customers that we are not interested in doing a project for them, but that we would love to do a project with them. Mantec’s philosophy is that performance improvement means focusing on “production” – the cost of creating the “product”, whether it is a physical item or a service. All individuals must know what is expected of them Everyone must know what is expected of the that day and, by the time they leave for home, whether they have met the expectations that day and, by the time they leave for home, whether or not they have met the expectations. If the expectations were not met, it is then necessary to focus on the reasons – and act on them. Cascading performance goals Generally speaking the reason for failure is found to be a lack of focus on perfor-
mance. From time to time it is healthy to go back and define the core business, review why we are in business at all and define in detail what is expected from the various support functions. Then it is necessary to develop very clear understandable goals (of which there should be not more than five) and cascade them through the management levels, always ensuring they are clear and achievable. Remember, the targets you set yourself are generally not meaningful to people lower down the organization – their targets which support yours should be broken down for them and for the people they are managing. A target of ”EBITDA increase of 4%” might (or might not) sound good to a production supervisor but it doesn’t mean anything on the shop floor. More usefully, a lower-level goal could be that line F should produce 210 brake calipers per hour with five people on the line instead of, as previously, 180 per hour with Continued on following page >
Proven Solutions Proven Results Who we are Outotec provides technology and life cycle solutions for the sustainable use of the Earth’s natural resources. We are the global leader in minerals and metals processing. Over the last several decades, Outotec has developed many breakthrough technologies which are still industry benchmarks today. We also offer innovative solutions for the utilization of alternative energy sources and industrial water treatment. With a worldwide sales and services network, operating in 24 countries including South East Asia, we are ready to work with you.
Market leaders in Concentrator Solutions
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The first to install mechanical flotation cells in 300m3+ category; three have been running since 2007, over 250 have been sold since then The first ever designed and built 500m3+ flotation cell ready for the next generation large projects World’s leading Mill supplier for SAG and Ball Mills World’s largest acid-proof AG grinding mills (3 off 30’x 46.5’ – 14MW) Outotec Larox filters are industry leaders in filtration technology Outotec Vane Feedwell™ is the thickening industry’s first major feedwell innovation since the 1990s – seven patents, global standard for Outotec feedwells Roy Bateson Outotec Regional Account Manager, South East Asia roy.bateson@outotec.com www.outotec.com
Philippine Resources 49
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PSEi bucks the trend with a powerful performance W
hile nations and financial markets across the globe struggled in 2012, the strength of the local economy helped propel the Philippine stock market to a record breaking year - fueled by improved corporate earnings, strong local demand, and continued macroeconomic stability. At the end of 2012, the PSEi set new records for a total of 38 times, and posted an annual growth of 33 percent. For 2013, the PSEi charted new territories as it edged closer to the 6,000 level on Thursday. It closed at 5,934.05, up 73.06 points or 1.25 percent. This level beat Wednesday¿s finish at 5,860.99. In Asia, the PSEi ranked second behind Thailand’s SET Index at the close of
< Continued from page 49 five people. This means an increase from 3 per minute to 3.5 per minute – something the supervisor and his people can understand. The job of the middle tiers in the organization is to define the goal in increasing levels of detail. What to do and who will do what Another reason for not succeeding is often a lack of constructive communication. Everyday communication between managers and between management and the workforce should contain clear expectation: what to do and who will do what. Follow-up must be carried out – people lose faith in their manager if he or she never bothers to show interest in what they do. To improve, frequent follow –up is required; the faster the followups must be – simply because the consequences per hour of production become very significant. When following–up, achievement should always be measured against the original expectations and ac50 Philippine Resources
2012, followed by the benchmark indices of India, Japan and Hong Kong. This is an impressive follow-up for the Philippine index after occupying the top spot in 2011.
Inc. is also at an all-time high, and this can only serve to strengthen our market as we tackle new challenges and opportunities in 2013,” PSE President & CEO Hans B. Sicat said.
Capital raised at the Philippine stock market reached a new record at P219.07 billion in 2012, the highest total amount raised since 2011. This figure is 103.8 percent higher than the amount raised last year. Capital raising activities include initial public offerings, follow-on offerings, stock rights and private placements.
Total value turnover for 2012 registered a new record high for the exchange as it reached P1.77 trillion, 24.5 percent higher than the P1.42 trillion registered in 2011. The increase coincided with the extension of trading hours up to 3:30 p.m. starting January 2, 2012.
“The stock market’s performance in 2012 re-wrote the record books in a big way, as seen in the new highs we¿ve experienced across almost all market indicators. Investor confidence in Philippines,
The combined market capitalization of listed issues in the PSE at yearend came in at P10.93 trillion, up 25.7 percent from the P8.70 trillion registered the previous year. ■
tions should be taken when shortfalls occur. ”Action” can be defined as mitigating the consequences of the shortfall or preventing it from happening again.
starts going up again and in order to meet up with the challenges thrown at them by the changing socio-economic, technology, economic and competitive as well as legislative demands.
All in all, both operations management and performance improvement are easy in theory, but it is we as individuals with our individual goals, who create the challenges – and we who can and must initiate and implement important improvements.
The Philippines’ much discussed legal framework for mining industry creates a level of uncertainity on the market for all the operators, causing investments being frozen until implementation rules are implemented. For a advance thinking company this may well be the right time to ensure that its operation is in tip-top shape and ready to profitably adapt to the new regualtions.
Near future Latest financial turmoil and instabilities of world economy have changed the encouraging comments of many of our clients back to “wait and see”. Only this time many visionary and far sighted companies, with our help, are going ahead with their strategic development projects and their pursuit for Operational Excellence in order to be in a perfect shape to take on the market when the economic roller coaster
The writer, Mr. Paal Austad, is an owner of Mantec International and the CEO of Mantec Asia and he has worked in strategy implementation, quality and productivity improvement and change management business for good 25 years, helping over 300 organizations in dozens of industries and countries generate better profits and create more meaningful work places. ■
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Wealth of experience behind “Slimline service When the critical data is buried deep
beneath the earth’s surface and accessible only through the narrowest of boreholes, Weatherford’s Slimline logging services can deliver the information required. Weatherford has more than 40 years’ experience as a global provider of mineral logging services. Services include the acquisition and interpretation of logging data from small-diameter boreholes to assist in making decisions critical to the extraction of coal, minerals and unconventional hydrocarbon resources Weatherford Slimline logging is a CostEffective alternative to Core-Sample Analysis Core-sample analysis is effective for gathering data in coal and minerals mining, as well as hydrocarbons extraction. However, obtaining and transporting the core samples to a lab can be expensive
and time-consuming and may not provide the complete answer. Mineral logging can present a more cost-effective alternative, yielding high-quality data in a fraction of the time and cost. Whether used to supplant or supplement coresample analysis, mineral logging can help improve company’s bottom line in the drilling of small-diameter holes. Some of the applications for Weatherford Slimline logging includes Coal, Base metals, Diamonds, Gold, Platinum, Silver and Uranium. In addition Slimline logging can be utilized for Unconventional hydrocarbon resources such as Coal bed methane, Oil sands, Oil shale, Shale gas and oil, Shallow oil and gas. Weatherford tailors the Slimline acquisition packages to a company’s specific needs, selecting appropriate equipment and personnel before logging operations begin. Working at the job site, our experienced crews use various specialized technologies to acquire logging data,
with minimal impact to the surrounding environment. Although applicable to coal and minerals mining, our Slimline tools are manufactured and calibrated to the more exacting oilfield standards, thus optimizing their performance in the field. With personnel and material resources strategically located throughout the world Weatherford can accommodate tight deadlines, no matter where the operation may be. Weatherford compliments the data acquisition logging with a full interpretation services which converts data into meaningful, decision-enabling information. The Geoscience subsurface evaluation team, consists of engineering and geosciences professionals with expertise in many fields. The company’s interpretation services can help determine many critical details such as borehole deviation, geo-mechanical properties, the boundaries of zones of interest and water levels regardless if the objective is bituminous coal, extraheavy crude or a precious metal. The information that can be obtained through Slimline Logging includes hole deviation, borehole diameter, temperature 3D images, coal quality (ash, moisture), presence of dikes and sills, density of coal seams, overburden thickness, mechanical properties of formations, concentrations of unstable isotopes such as Potassium, Thorium and Uranium, geo-mechanical properties / formation properties such as dip magnitude and azimuth breakout orientation, fault delineation stress lines of oxidation, shear wave (S-wave) propagation, water levels and defining zones of interest.
Weatherford’s wireline sevice is portable and robust. 52 Philippine Resources
Overall Weatherford’s Slimline logging can provide Resource companies with the cost effective information needed to make the correct evaluation, extraction and explorations decisions. ■
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Worldpoly expands offering into the Philippines
A
ustralian-based Worldpoly has been a successful leader in the polyethylene pipe and fittings industry for over 50 years. It is a specialist in the development and production of international standard PE pipe welding fusion equipment, and are currently exporting to 90 countries worldwide. A good example is the recently released Worldpoly PolyRover 630, the latest development in a new series of Australianmade and engineered Welding machines. The PolyRover comes in two configurations – PolyRover 630 Trench and PolyRove 630 All Terrain. The practical design and robust quality construction is an excellent choice for pipeline welding in all terrains and applications. These units compliment the broad range of welding machines already on offer from Worldpoly covering the entire range of pipe sizes you’re likely to need to weld.]
Worldpoly not only manufacture and supply some of the best PE welding machinery on the market, it also offers international training and advice, providing on-ground support to ensure your desired outcome, every time.
An excellent example was when Masbate Gold Mine, located in the Bicol region in the Philippines, acquired its Worldpoly welding machines and had 16 of its technicians trained and certified by Worldpoly’s international trainers. This provided them the skills to install all their HDPE pipes themselves with the assurance that the work would be completed to the highest international standards. Another good example is BHP Billiton’s expansion of the Antofagasta, Chile desal plant to provide the water requirements of Minera Escondida copper mine, with the addition of even larger diameter polyethylene pipe to that already used by the company. With the inclusion of 1400mm OD polyethylene pipe in the project, BHP Billiton added yet another Worldpoly machine to their collection which now includes 1600, 1200, 630 and 315mm models. The addition of this machine now gives the capacity to weld all diameters of polyethylene pipe installed across all facilities. Two further WHD1600 machines, each capable of welding polyethylene pipe from 900mm to 1600mm diameter, were supplied to the contractor for this pro-
Worldpoly offers international training and advice, providing on-ground support to ensure a desired outcome. 54 Philippine Resources
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Monark boosts support for mining Brunel, Site Works team up
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Weatherford opens new Singapore facility to help service region
W
eatherford International recently officially opened its new multi-million dollar facility in Singapore, which will provide a strategic base for the company’s operations within the Asia Pacific region.
The base – which brings together the country’s 300-strong workforce under one roof for the first time – will incorporate Manufacturing and Technology, Assembly and Test, Repair and Maintenance, and Warehouse facilities as well as Administrative and Office space. Weatherford’s new four-storey development also has additional capacity, enabling the increase of staffing levels by 30% to 400 as the company continues to meet increasing demand for services across the region. The development of the company’s new hub is in line with its expansion in the region, having outgrown a number of its facilities since it first established an operational base in Singapore in 1972.
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Asia Pacific Base
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Peter Fontana, Chief Operating Officer of Weatherford, said: “This development is critical to the ongoing success of our business within Singapore and will provide a base from which we can coordinate and expand our operations across the Asia Pacific region.
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“We have identified significant growth potential in emerging markets such as Bangladesh, Brunei, Vietnam, Philippines and Myanmar and our investment in this new facility is a milestone in the evolution of our business in these key areas. “Our previous footprint in Singapore was spread across 11 different buildings or plots in two primary locations. The new state-of-the-art facility will provide the platform from which Weatherford can continue to keep pace with economic growth and conditions and maintain its position as a market-leading oilfield services company. “The investment in this new facility is recognition of the strategic importance of Singapore to Weatherford in realising its ongoing ambitions in the emerging markets of the Asia Pacific region.” Julian Ho, Assistant Managing Director of the Singapore Economic Development Board, said: “Weatherford’s decision to consolidate its various facilities in Singapore into this new multi-million dollar location positions it for growth and expansion. “It reaffirms Singapore’s attractiveness as the leading hub in the Asia Pacific region for the oil and gas equipment & services industry, and signifies a new milestone in our 30-year partnership. Our skilled workforce, excellent logistics infrastructure and reputation for quality make Singapore an ideal location for Weatherford to better serve its customers in the region and beyond.” ■
large and small, In urban landscapes and jungles, and our confidence to get the job done and