Rodrigo Duterte attacked mining companies in his State of the Nation address to the Philippine Congress over their abuse of the country he leads.
His concerns are threefold:
• Environmental degradation
• The export of raw ores without processing
• Miners’ failure to share the revenues of resource extraction
The Philippines is the world’s largest exporter of nickel ore. Current mining practices are leaving rivers, rice fields and watersheds stained red with toxic nickel laterite.
“You have to come up with a substitute, either spend to restore the virginity of the source or I will tax you to death,” Duerte threatened.
In February, acting Secretary of the Environment and Duerte ally Regina Lopez shut the operations of 28 of the country’s 41 mining companies, then cancelled 75 contracts to develop new mines.
One of the affected companies, Melbourne-based OceanaGold, told Fairfax Media in a statement that if negotiations to lift the suspension fail the company will consider “all legal and administrative remedies” available to “ensure there is no disruption to the mine and its workforce”.
Regina Lopez’ permanent appointment to run the department was not ratified by Congress’s Commission on Appointments in April. She was reappointed over the Commission’s heads by Duerte but lost in a further vote in May.
University of the Philippines resource economist Dr Cielo Magno said her country had sound environmental laws, but the government’s failure to ensure compliance is “a huge problem”.
Miners routinely snub in-country minerals processing, even with energy, transport and technical advantages. Their deliberate preference is to export raw or intermediate ores so they can channel international sales through offshore tax havens. The Philippines is further advantaged by cheap labour and a hunger for economic activity, yet only processes a fraction of its production.
Australia knows how difficult managing mining companies is. They spent freely on lobbyists and advertising to destroy Treasury’s Resource Super Profits Tax. Many have evaded their obligation to rehabilitate depleted mine sites. More recently they brought down the WA Nationals leader Brendon Grylls for daring to suggest a rise in the iron ore royalty.
We have fearless tax assessors armed with forensic accounting skills, yet managing a quality resource tax regime seems impossible. Australia is turning to lesser royalties.
Imagine how much harder the task is where the rule of law is optional, corruption is rife (ranked 100/176 by Transparency International) and the people are dirt-poor (Phillipines GDP per person $US2,900 pa).
The international standard Australia and The Philippines need to emulate is Norway’s oil tax regime that built a sovereign wealth fund now worth 900 billion Australian dollars – or $165,000 per Norwegian. That is a distant dream for Australia and probably impossible for the Filipino people.
Prosper in no way supports or excuses the Philippines President’s program of extra-judicial murder of alleged drug traders in which over 7000 people have died at the hands of police and vigilantes. These abuses of the law and of basic human rights are a form of genocide and must be denounced wherever they occur.