I spent part of last week in Baguio, the “summer capital of the Philippines”. At an altitude of 5000 ft it’s significantly cooler than other Philippine cities, and for that reason still a popular holiday destination for Manila residents. In the 1920s and ‘30s Baguio also witnessed a number of gold rushes, and many gold mines were established. It was in connection with mining that I visited the city this time. I joined a number of other foreign ambassadors from Manila at the annual conference of the Philippine Mine Safety & Environment Association. This year’s conference was entitled “Responsible Mining: Enabling a Better Future”.
Mining is a controversial issue in the Philippines: a tale of huge potential and significant challenges. The Philippines is the fifth most “mineralised” country in the world. It has the world’s 3rd largest gold, 4th largest copper, and 5th largest nickel reserves. In a world of massive demand for minerals, and high commodity prices, this presents a huge opportunity for the country’s development. Mining can generate significant revenues to build infrastructure and pay for public services, and bring in foreign investment and new jobs. But actual production is much lower than you might expect from these vast reserves (the Philippines is only the world’s 11th largest gold and 31st largest nickel producer). There is significant opposition to mining from parts of civil society and much of the Catholic Church, who highlight the environmental impacts and human rights concerns. They are able to point to cases where mining projects (and in particular, illegal small scale mines) have scarred the environment and harmed local communities. The national mining law has been commended as a model of international good practice for nurturing the industry while providing safeguards. But its provisions are sometimes thwarted by contradictory local regulations.
The purpose of the visiting ambassadors was not to tell the Philippines how to manage its mining industry. Rather, we went there to offer perspectives on mining in our own countries. It was as instructive for me as it was for the local audience. The Chilean Ambassador noted that in his country mining income now accounts for 10% of GDP (and is strongly supported by the Catholic Church); the South African Ambassador quoted 7% for her country – and noted that the industry directly employs half a million people and another 5 million who depend indirectly on mining for employment. By contrast in the Philippines, according to the government representative, mining produces just 1.4% of GDP. Social issues were also discussed. The Brazilian Ambassador described labour rights protection in his country; my South African colleague talked about black economic empowerment in her country’s mining industry.
As British Ambassador I approached the issue from a different angle. Mining is now a very small industry in the UK itself, although in the 19th century Britain was the world leader in coal production (and developed deep mining techniques and important technical innovations like Sir Humphrey Davy’s safety lamp). Today, Britain’s significance to the industry is as a centre for global mining – in terms of finance, technology and know-how. The City of London offers a wide range of financial services to the global industry, including unparalleled capital raising opportunities and advisory services. Four of the world’s five largest mining companies are listed in London, and two of these are also head-quartered there (Anglo American and Rio Tinto). London-listed Xstrata is an investor in the Tampakan mining project in Mindanao, potentially the largest ever foreign investment project in the Philippines. Smaller, fast-growing mining companies often list on AIM – London’s Alternative Investment Market.
Mining technology is an important element of Britain’s advanced engineering sector, continuing a tradition of mining innovation from the 19th Century. A large number of mining technology and services companies are members of ABMEC, the Association of British Mining Companies, and supply their products around the world. The Camborne School of Mines in Cornwall is arguably the world’s most famous mining school and an international centre of excellence in geology, mining and minerals processing. Its graduates work all over the world – including the Philippines. As mining develops in the Philippines, the UK could be an excellent source for the industry’s technology, skilled personnel and capital needs.
For the UK government, I noted that British embassies support our mining companies to do business overseas – helping British firms achieve international business success is what our embassies and consulates are all about. That’s good not just for the UK. I do believe that well regulated mining, undertaken responsibly and with proper safeguards, can make a real contribution to the Philippines’ economic and social development – as it is already doing in many other developing countries. It’s worth noting the UK’s support for various responsible mining initiatives, like the Extractive Industries Transparency Initiative and the Voluntary Principles on Security and Human Rights, which are supported by our major mining and resource companies. British miners, like all British businesses operating internationally, are also bound by the UK’s strong anti-corruption legislation, the Bribery Act, which came into force this summer.
How to develop the mining industry here is ultimately a matter for the Filipino people, through their elected leaders in government and representatives in Congress. But a clear policy and regulatory framework, properly implemented and enforced, is important so that everybody knows where they stand, including domestic and foreign investors. In taking decisions about the future of mining, the Philippine Government will have to balance a wide range of complex and challenging issues. These decisions will best be made on the basis of a reasoned and informed debate. I hope that in a modest way, the foreign ambassadors’ involvement in last week’s PMSEA conference was a positive contribution to just such a debate.