Philippines mining threats nothing new - risk consultancy

24th January 2011 By: Matthew Hill

TORONTO (miningweekly.com) - The December threats to the mining industry from a leftist group in the Philippines aren’t credible, and are no different from previous warnings, a Hong Kong-based security risk management consultancy said at the weekend.

In a report, Allan & Associates said the Communist Party of the Philippines’ (CPP’s) military wing, New People's Army (NPA), relied on the mining industry for “taxes” and other supplies, and wouldn’t gain from driving the industry out of the country.

“Threats against mines or other businesses have created a large private security presence. These individuals rarely offer a serious challenge to the NPA, but they do serve as a useful source of firearms, mobile telephones, radios and other equipment needed by the guerrillas,” the consultancy said.

Further, Allan & Associates analyst Gavin Greenwood said the official view of the threat was that is simply represents the yearly demand for so-called “revolutionary” or “war” taxes extorted by the CPP/NPA – which the communists have also dubbed “fines”.

“No one disputes that large sums of money are collected by the CPP/NPA in exchange for permitting companies to operate in areas where their interests can be readily disrupted by force if they fail to comply,” said Greenwood.

The Philippine Daily Inquirer newspaper in December reported that the threats were in response to government announcements that it would take up the matter of the “tax” in February talks with the rebels.

“By late December 2010 at least seven mining companies operating the Caraga region have complained of extortion attempts by the NPA and have implied they may have to leave the area,” Greenwood said, citing military sources.

‘QUIETLY PAYING OFF’

There was the risk that government and companies could resort using greater force in combating the NPA, Allan & Associates said.

Senator Gregorio ‘Gringo’ Honasan, the former army officer, earlier this month advocated allowing mining companies to raise and control their own armed militias to deter NPA attacks.

“Heightened tension and increased conflict would lead to an inevitable increase in civilian casualties, human rights abuses and the potential for corporate reputational harm,” Greenwood noted.

He said that “quietly paying off” the NPA rebels might be the only option to keep mines producing and for projects to proceed.

“In strictly economic terms the payments demanded by the communists can be treated as costs like any other expense – with the rising price of fuel probably a far greater burden on operations than extorted ‘taxes’,” said Greenwood.

The Philippine Star reported on Monday that anti-mining radio commentator Gerardo Ortega was shot dead in Puerto Princesa City, Palawan.

Companies including the UK-Swiss giant Xstrata, which aims to build the $5-billion-plus Tampakan copper mine, and Freeport McMoRan have projects in the Philippines.

The Roman Catholic Church in the Philippines has also tried to block mining projects over the past three decades.

According to the Wall Street Journal, analysts estimate the country has the third-largest copper resources in the world.

TSX-listed TVI Pacific said in a presentation that the Philippines ranked in the top five globally for gold, copper, nickel and chromite.