Gerard H Brimo, President and CEO, Nickel Asia Corporation: Interview

Interview: Gerard H Brimo

How can mining officials ensure the development of the communities surrounding mining sites?

GERARD H BRIMO: Mining firms are already mandated to spend 1.5% of their annual operating costs for the development of their immediate local communities. Moreover, excise taxes and royalties on mining operations are shared with local government units, providing more funds that can fuel development if spent wisely. Generally, host communities are supportive of the industry in properly organised mining areas, as they benefit from the development that the sector generates.

That said, the country can do a lot more in the sphere of social development in remote, mountainous areas, which is exactly where the mining industry tends to be based. The Philippines is rich in natural minerals and yet mining accounts for only 1% of GDP. The country could use its mineral resources to decrease poverty, but this would necessitate greater government support. The case of Palawan, which has been declared a no-go mining zone, illustrates this. There are few tourist areas in southern Palawan, nor is there much in the way of agriculture, in areas where the soil is lateritic, meaning it is full of iron, reducing the availability of nutrients and impeding agricultural development. As a result, lateritic areas call for different forms of development. Prior to the beginning of operations at our Rio Tuba mine, the area was not developed. Infrastructure did not exist and people had limited means to earn a livelihood. However, looking at it now, mining has generated significant opportunities in that part of Palawan.

To what extent can the Philippines’ candidacy for the Extractive Industries Transparency Initiative (EITI) enhance environmental safeguards?

BRIMO: Large-scale metallic mining companies have been advocating participation in the EITI for years. Currently, mining companies that represent in aggregate over 95% of the revenues for the entire industry have signed waivers in order to allow the Bureau of Internal Revenue to disclose their tax payments on a voluntary basis. As a result, the Philippines hopes to reach country accreditation within a year.

The EITI holds great potential to improve transparency in both the extractive sector and the government. Extractive companies publish details about their tax payments, and any discrepancies with government receipts undergo a reconciliation process. Companies also publish details of their social expenditures and royalties to indigenous peoples, while there is a write-up on applicable laws and regulations regarding extractives. In addition to the EITI, there have also been other significant initiatives to strengthen environmental protection. The monitoring by the Mines and Geosciences Bureau has involved multipartite teams overseeing the performance of each mining company on a quarterly basis. However, such efforts need to be followed in small-scale mining. Unfortunately, the negative image of small-scale mining, which for the most part involves illegal, unsupervised operations, has affected the image of large-scale mining, as both are lumped together.

What kind of opportunities exist for the development of downstream and value-added industries?

BRIMO: Opportunities remain limited because the mining industry is currently small, while the country’s power supply is among the most expensive in our region. There are only a handful of copper and gold mines in operation today, and they are not large by international standards. There are more nickel mines producing nickel ore for exports, which Indonesia last year banned to encourage processing. If the Philippines did the same, it would be difficult to compete with Indonesia, which has higher-grade nickel mines in contrast to our mostly low- and medium-grade operations, and has abundant coal with higher calorific content than ours to power their plants. If there are opportunities for significant value-added activities, the private sector would naturally gravitate towards those. We have also proven that through our participation in two nickel processing plants in the country, even without a ban in place.