Yellow Pad

Business WorldBusiness World
The communities of Didipio, Nueva Visacaya have been up in arms against the operation of Oceana Gold Philippines, Inc. (OGPI). OGPI has been operating a copper-gold mine in Barangay Didipio in Kasibu, Province of Nueva Vizcaya. A Financial or Technical Assistance Agreement (FTAA) was awarded to OGPI in 1994, but the company only started its full operations in 2011. The first commercial production was reported in April 2013. Now, the FTAA has expired and is up for renewal.

The negative social and environmental impacts of the mine have been one of the concerns of the local stakeholders. More recently, the communities living near the Didipio mine claimed to have water supply problems including access to potable water, and availability for use in their homes and farms. Media releases from OGPI stated that it has been responsible for water management. The extent of water recycling at the Didipio mines is almost 75% at present, according to Oceana Gold Corp.

Since water is vital in mining, John Morillo, a graduate student of the National Institute of Geological Science of the University of the Philippines, and I decided to do an analysis of the water use of large scale mining in the Philippines. This study was supported by the Natural Resources Governance Institute (NRGI)

The Didipio Mine was one of the large-scale mines we examined. Using publicly available data, we estimated the available surface and groundwater resources of the area and compare these with water consumption at mines to determine if there is over extraction. We also tried to understand the impact of water consumption based on the mining activities and their rate of extraction and timing (i.e. which activities or events possibly correspond to an increase or decrease in consumption) by carrying out statistical analyses to establish correlation. We identified areas affected by water consumption using existing climate and land use data and its short-term and long-term impact to the water use of local communities.

This is what we have learned:

• Looking at the relationship between population and water use, we can see that there has been an increase in water extraction vis-à-vis the increase in population of Didipio. By 2020, the projected population in Didipio will reach 4,000. Based on our estimates, Didipio households are expected to spend 73,000,000 liters or 73,000 m3 of water per annum by 2020. This is roughly 0.4% of the total water extraction by the Didipio Mine operations in 2018 and barely 0.15% of the total projected water budget in the Didipio watershed. Hence, while a significant positive relationship can be seen between water extraction and population, households still have a relatively smaller“ significant consumption compared with the operations of Didipio Mine.

• The most significant positive relationship with water use is the disturbed area of the mine. “Disturbed area” refers to altered land cover by the mine due to operations or mine development such as construction of facilities and roads, tunnels, and removal of rocks from the surface. Increased demand for water may be attributed to commercial production, which began in 2013, and the expansion of operations to underground mining in 2014. It is noteworthy that water extraction increased almost tenfold from 2010 to 2011 when full-swing mine development was commencing. Water extraction also doubled from 2013 to 2014 during the time when OGPI was starting its underground operations and environmental spills were recorded (from the reports of Oceana Gold Corp.).

• The correlation between water extraction and rehabilitation is not as high compared with operations-related activities, but still statistically significant due to water demands in reforestation.

• At times when mine development commences or a significant environmental spill is recorded, a major increase in water extraction arises. On the other hand, while gold and copper production maintained a nearly stable pattern, these did not necessarily lead to increased water extraction (compared with mine development or during an environmental spill), possibly because fresh water is not much used during recovery processes.

Overall, we observed that the operational expansion, mine development, and occurrence of environmental spills in the Didipio Mine are significant contributors to the use of underground water in Didipio. These activities present a certain level of threat to the communities relying on groundwater as a source of potable water. The increase in the use of underground water by Didipio Mine and the expansion of its operation coincide and validate the water problem experienced by the host community. This is a concrete example why communities hosting mining operations vehemently oppose mining activities in their area. While we drool over the potential dollar revenues these minerals may bring us, we overlook the negative environmental and social impacts of these operations to the host communities.

The study is not without limitations. The lack of public disclosure and accessibility of data and inconsistency of reports from private companies limited the methodology that we can use in analyzing this data. It also limited the scope of our analysis. Public availability of relevant, reliable, and up-to-date data help in producing more robust, evidence based studies to support public policy. This brings me to another relevant policy issue.

In 2013, the Philippines joined the Extractive Industries Transparency Initiative (EITI). We were among the first countries to meet the requirements of the 2013 EITI Standard. However, not much has happened in terms of progress of the initiative in the country since then. EITI is not just about disclosure of revenues. It is an opportunity to create spaces for dialogue between stakeholders of the extractive sector. While the relationship between the stakeholders may not always be friendly, it facilitates an opportunity for dialogue. Disclosure of data and dialogues will not immediately solve the problems of the extractive sector. But it contributes to objective, evidence-based conversations and greater accountability of stakeholders.

The Philippine EITI started to publicly disclose information about the large-scale metallic mining sector. This is supported by the Chamber of Mines of the Philippines. In fact, disclosure went beyond what was required by the 2013 Standard. Albeit incomplete, the Philippines was a model in disclosing environmental and social data. The next logical step would have been more systematic disclosure of latest disaggregated data to allow monitoring and independent analysis by communities and the public. Another logical step is to replicate the national level multi-stakeholder conversation and disclosure at the sub-national or local level to also cover the small-scale mining industry. The stakeholders from civil society and the mining industry support this track. But the most important support for good governance in the extractive sector to continue should come from the government.

The commitment of the government has waned since the first validation. Semirara Mining Co., the biggest coal mining company in the country, is still not participating in EITI. Talk about the peak of government regulatory ineffectiveness. The Department of Energy cannot even make a coal company comply with public disclosure. The PH-EITI data are also outdated. Some of the data and information, like the water rights and tree cutting permits of companies, have not been disclosed. The auditor of the 2018 and 2019 PH-EITI reports and other contractors have not been paid. I am sure the waning interest in good governance of the extractive sector is not because of the lack of enthusiasm from the civil society and the extractive companies. The lack of interest and leadership to prioritize good governance in the sector comes from the national government.

The Philippines will again undergo validation of its compliance with the EITI Standard in October 2020. And this time, the commitment of civil society and industry may not be enough to salvage what remains of the reputation of the country in promoting good governance in the extractive sector. If there is anything we learned from this experience, some initiatives are better legislated so that even with the change in government leadership, we are able to institutionalize the gains of reforms. It is time for a law creating the EITI in the Philippines.