Lepanto
and its Teresa Project dooms the people
As the Lepanto Consolidated Mining
Company operates its Victoria Gold Project (VGP), the biggest gold
producer in the country announced a new expansion project to start
this year. This is the Teresa Gold Project of Lepanto in Mankayan,
Benguet. Simultaneous with the Teresa and Victoria projects is the
revival of the Far Southeast Project and copper mining which has
been Lepanto’s main production before the VGP. For all these
plans, the mining company has reopened its exhaust tunnel which
was closed in 1997 due to community protest and the DENR Environmental
Management Bureau’s closure order.
With these developments, Lepanto is in hot waters as community
protests rage, backed by a growing broad support. Local government
officials and community organizations expressed their opposition
to the Teresa Gold Project.
Time and again, legitimate issues and concerns have been raised
by the people but to no avail. Experience shows that even government
laws and legal procedures were easily ignored or circumvented by
the mining company.
In the context of high profitability
The total volume and value of gold production in the country continue
to rise, by 6% for the first quarter 2003 and by 28% during the
first quarter of the year. The profitable price of gold has pushed
the gold production value to increase from PhP4.98 billion to PhP6.37
billion early this year. Being the biggest gold producer, Lepanto
was largely instrumental in the increase. Of course, the production
of small scale gold miners reflected in the purchases of the Bangko
Sentral ng Pilipinas (BSP) and other gold mines (Canatuan Gold Project
of TVI Resources in Zamboanga del Norte, Acupan Contract Mining
Project of Benguet Corp. in Benguet, Diwalwal Direct State Dev’t
Project of the Natural Resources Mining Dev’t Corp, and Paracale
Gold Project of Johnson Gold Mining Corp. in Camarines Norte) contributed
to the total output.
The Teresa Gold Project of Lepanto is expected to contribute much
to the total Philippine gold production if it becomes operational
this year.
For the first six months of 2004, Lepanto has the following production
as posted in its website:
2004 Jan Feb Mar Apr May June YTD
Tonnes Milled 71,280 67,320 70,840 65,680 67,180 64,820 407,120
Tonnes per day 2,376 2,321 2,285 2,346 2,239 2,235 2,300
Head grade
g/t Au 4.26 3.98 4.13 4.60 4.66 4.21 4.30
g/t Ag 19.90 15.50 18.50 17.40 18.20 15.70 17.60
Gold recovery, %
Gold 91.45 91.37 91.03 91.79 91.95 91.97 91.60
Silver 35.31 40.43 32.61 34.04 40.66 45.15 37.68
Production, oz
Gold 8,918 8,103 8,338 8,911 9,246 8,068 51,584
Silver 16,065 13,626 13,714 12,479 16,028 14,796 86,708
As the biggest gold producer in the country today, Lepanto claims
an annual gold production of 150,000 ounces. The mining giant is
also a major contributor to the continuing increase in silver production
with 30% and 91% growth rates for first quarter 2003 and 2004, respectively.
Compared to the first quarter of 2003, the company has a substantial
increase of 133% in the output of the VGP.
Lepanto incurred losses during the first and second quarters of
2003 as a result of the workers’ strike during the whole month
of February with the support of peasant communities in the municipalities
of Mankayan (Benguet), Cervantes and Quirino of Ilocos Sur, Tadian
(Mountain Province), and the various sectors of Baguio City and
as far as the province of Kalinga. This was a historic event that
almost put Lepanto down to its knees and a lesson that the people
will cherish in their continuing fight to end this giant menace.
In too short a time, Lepanto declared profitability in its unaudited
net income of P66 million and P112 million for the third and fourth
quarters of 2003, respectively. For the first half of 2003, Lepanto
produced 33,780 oz which increased by 67% in the second half to
56,640 oz. However, it later clarified the net income for the period
is P57 million due to foreign exchange losses and repayment of dollar
loans. Still, that is a gargantuan net profit squeezed out of the
sweat and blood of the workers, environmental destruction and plunder
of the people’s intergenerational livelihood, lands and resources.
Note the destruction and plunder brought about by extracting 2,300
tons of ore milled per day and the corresponding tons of chemical
elements used in processing resulting in tons of toxic wastes dumped
into the Abra River, adding more pressure and threat to the potential
collapse of Tailings Dam 5-A.
For the first three months of 2004, Lepanto earned a net profit
of P81 million with a gold production of 25,359 ounces. This is
a 96% increase compared to the first quarter of 2003. Thus, just
for the three quarters (second and third quarters 2003 and first
quarter 2004), Lepanto accumulated a net profit of not less than
P138 million.
Target gold production of Lepanto for the year 2004 is 113,800
ounces and given a gold price of $390 per ounce, the mining company
will have income of P460 million. Having declared a 150,000 oz annual
gold production, this must be the least minimum target and therefore,
the least minimum target profit. Besides, the price of gold in the
world market is highly profitable given that the price per ounce
reached $408.27 (gold price as of September 24 is $407.60-408.10
which is expected to increase more), its income from three simultaneous
projects (VGP, Teresa and copper mining) and gains from other metals
would far surpass the minimum P460 million net profit for 2004.
Now, the question is: who benefits from these millions? Certainly
not the people affected, not the national economy, not the majority
Filipino people, and not even all of its stockholders. It is Lepanto’s
top corporate officers and investors who reap these millions of
superprofit. Of course, big government bureaucrats and corrupt officials
in various government agencies like the DENR, NCIP and some local
government units receive their share as facilitation or protection
money especially since Lepanto has been a consistent violator of
laws and rights of communities.
With these superprofit and financial capacity, Lepanto can easily
expand the coverage of its destructive mining operations beyond
Mankayan, Benguet and target simultaneous projects which will rake
more profit for the giant. One among the six prospects nationwide
for the revival of copper production to augment the production capacity
of Philex Mining Corporation, which is the only remaining copper
concentrate producer in the country since August 2001, is the reopening
of the Far Southeast Project of Lepanto in Mankayan, Benguet. Lepanto
continues operating its VGP through the 700L project (which is the
deeper section of the Victoria ore body) as it commences its new
expansion project, the Teresa Gold Project. Lepanto would not target
these plans and operations if not in a highly profitable situation.
Given a highly profitable mining operation, Lepanto should give
just living wages, benefits and incentives to its workers and employees;
seriously compensate for damages of properties, livelihood, deaths
and other disasters to communities adversely affected by Lepanto
for a long historic time; repair and rehabilitate sinking areas
and landslides; mitigate the health impacts of its operation; and
serve in the development of the communities and its people vis-à-vis
the profit that it gets. But, as history shows, this is impossible
to expect from Lepanto. This is an illusion as Lepanto is motivated
by super profit accumulation and capitalist greed.
We have no choice but to end this menace.
Other Significant Developments favorable for Lepanto’s Teresa
Project
Mining giants continue to enjoy the increasing prices of major
metals like gold, silver, copper and nickel in the international
market. Early this year, the prices of copper, gold and silver increased
by 64%, 16% and 42%, respectively. Gold prices remained upbeat at
US$408.27/troy ounce (1 troy ounce is equivalent to 31.157 grams)
average during the first quarter of this year compared with US$352.43/troy
ounce average during the same period in 2003, marking a US$55.84
difference. Average price of silver remained positive at $6.64/troy
ounce with an increase of 42% from its $4.66/troy ounce average
in the first quarter of 2003.
The rise in prices of these metals may have been pushed by the
increased demand of China for metals compounded by the US war of
aggression in Iraq and the volatile political situation in the Middle
East. Take note that prices also increased when US imperialist forces
invaded Afghanistan in 2002. Wars increase the demand of these metals
for the manufacture of war armaments. To mining capitalists, war
is good. It brings them profit.
In the Philippines, the present Arroyo administration as the worst
puppet and agent of imperialist globalization offered the country’s
mineral resources up for grabs to big mining capitalists by issuing
Executive Order No. 270 in January 16, 2004 known as the National
Policy Agenda on Revitalizing Mining in the Philippines. This policy
has concretely set the direction and mechanism of propelling the
all-out implementation of the Philippine Mining Act of 1995, R.A.
7942, even as it meant violating Philippine sovereignty, national
patrimony and peoples’ rights in favor of capitalist mining
under the supervision of the Department of Environment and its Mines
Geosciences Bureau. Further driving the voracious appetite of the
Arroyo administration is the plan for Charter Change which will
likely remove protectionist provisions of the Philippine Constitution
on national patrimony allowing 100% foreign ownership and control
on the country’s mineral investment and resources. Another
move is the filing of a Motion for Reconsideration for a reversal
of the Supreme Court decision of January 24, 2004 nullifying the
provisions on the Financial and Technical Assistance Agreement (FTAA)
of the Mining Act of 1995.
With the Philippine financial crisis at its depth, the Arroyo regime
is using the situation to further push its agenda on revitalizing
the Philippine mining industry to attract more foreign investments
as a way out from the brink of financial collapse.
Mining companies grapple to take advantage of the favorable situation,
just like Lepanto with its Teresa Gold Project.
Teresa Gold Project
Lepanto’s media releases say “the Teresa ore body is
adjacent to Victoria I and II sites” with an estimated gold
reserve of 110,418 kilograms. The new mine site has a lifespan of
15 years.
In a letter dated 9 October 2003, Lepanto informed the Disclosure
Department of the Philippine Stock Exchange of the approval of registration
of the new project by the Board of Investments. They were given
such incentives as income tax holiday for four (4) years, extended
for three years, starting in April 2004 or actual commencement of
commercial operation. What a pleasure offered on a silver platter
for the giant company at these times of great financial crisis.
Those with superprofits who should pay more taxes are the ones being
excluded from paying taxes for seven years. This is on top of the
practice of big capitalists in legally paying less taxes vis-à-vis
their huge and taxable income. This is one reason why the present
mining system in the country does not contribute to the country’s
financial supply, much less to national industrialization and progress.
The Teresa project has an approved capacity of 970,570 tonnes with
an equivalent of 162,860 ounces of gold per year. This annual gold
production is bigger than the usual annual production of 150,000
oz. Based on the latest geological work undertaken for Teresa as
of 1 January 2004, there is an estimated Mineral Resource of 9.92
Mt at 2.90 g/t Au from which an Ore Reserve of 1.75Mt at 5.63 g/t
Au was derived. [Refer to the summary of the Mineral Resource and
ore reserve provided in the table below.] This means Teresa has
a higher grade compared to the average head grade g/t Au production
of Lepanto for the first half 2004. As the target annual gold production
is increased, this will mean a higher grade with a more intensified
mechanized mining. Its concomitant result is more massive plunder
to extract the mass of gold and precious metals in a short span
of time.
Mineral Resource (as of January 1, 2004)
Mineral Resource Category Tonnes (M) g/t Au oz Au (M)
Teresa Measured 1.89 4.09 0.25
Indicated 1.65 3.14 0.17
Inferred 6.37 2.48 0.51
Total 9.92 2.90 0.93
Ore Reserve (as of January 1, 2004)
Ore Reserve Category Tonnes (M) g/t Au oz Au (M)
Teresa Proved 1.06 5.27 0.18
Probable 0.69 6.19 0.14
Total 1.75 5.63 0.32
Areas covered by the Teresa ore are barangays Suyoc, Guinaoang,
Bulalacao in Mankayan and Binucong-Loo, Buguias, Benguet. On top
of this, the mining company holds on to its expansion plan towards
Tadian and Mainit in Mountain Province by aiming for another 6,221
kilograms (1 kg is equivalent to 35.33 oz) of gold every year in
that expansion target.
Contrary to what Lepanto claims, the Teresa Gold Project is a new
and different mine project from Victoria II. Victoria II was discovered
in 1999 and, subsequently, commenced operation. Thus, Teresa and
Victoria II are not one and the same. Teresa is the project that
Lepanto declared to be operational this year. To set into motion
the Teresa Gold Project and continue its expansion, Lepanto has
reopened its exhaust tunnel in Toking, Pacda, Mankayan without the
peoples’ permission and without local government endorsement.
In fact, both the Sangguniang Bayan of Mankayan and Cervantes, Ilocos
Sur endorsed and supported the community petitions against the Teresa
Gold Project, revival of the copper mining and reopening of the
exhaust tunnel.
Why does Lepanto insist that Teresa project is Victoria II? Because
Lepanto wants to avoid fulfilling the legal requirements, such as
favorable endorsement of local government units, the free and prior
informed consent (FPIC) of affected communities and other processes
as it did with the VGP. As regards its VGP, the mining company remained
mute when asked to provide the Environmental Compliance Certificate
(ECC) for the project especially when the national office of the
MGB certified that there was no ECC ever issued for the Lepanto
VGP. The company also failed to get the free and prior, informed
consent of the communities. Moreover, the Sangguniang Bayan of Mankayan
has withdrawn its favorable endorsement for the project given in
2001. Therefore, the Memorandum of Agreement signed fraudulently
in 1996 between Lepanto and the Municipal Government holds no legal
basis. The Sangguniang Bayan withdrew its endorsement when it was
consistently questioned by the communities why there were no consultations
made and the communities sustained their opposition to the project.
Having nothing to show, Lepanto and the MGB ridiculously showed
the ECC of its past Farsoutheast copper project. Illegal as it is
and with no FPIC, Lepanto started and continued its VGP operation.
At any rate, no legal and environmental requirements were accomplished
for the Teresa Project even as it uses the VGP as alibi. The government
agencies, DENR and NCIP did nothing to act on these blatant violations.
This is just another ploy of Lepanto to do away with the legal
requirements , disregard the people’s protest and circumvent
the law in its favor and convenience in collaboration with the MGB-DENR
and some local officials.
Still, Lepanto has to undergo these legal and environmental requirements
of securing an ECC after conducting an Environmental Impact Assessment.
It has to get the favorable endorsement of local government units.
Paramount to all, Lepanto must have the acceptance of affected communities
and secure their FPIC. If Lepanto will just repeat its unlawful
and immoral mining project with the connivance of government agencies
like the DENR and unscrupulous officials, it should not be a question
if the communities will take the law into their hands and exercise
peoples’ power for what is just.
The Teresa Gold Project is another profit-making venture of Lepanto
that dooms the people. With this capitalist mode of mining production
backed by reactionary laws like the Philippine Mining Act of 1995,
only the local ruling elite who own Lepanto with their foreign partners,
will benefit at the expense of the indigenous peoples and peasants
from the plunder of their ancestral lands and resources . Through
the Teresa project and expansion beyond Mankayan, Lepanto undermines
the people and thinks it could easily spread its plunder beyond
the Abra River valley. Lepanto intensifies its record of development
aggression, exploitation and oppression against the people of the
Cordillera.
Massive and simultaneous mining by reviving copper mining, continuing
the VGP through the 700L project and the Teresa Gold Project will
aggravate the danger posed by Tailings Dam 5-A. More tonnage of
toxic wastes and silt will add more pressure and accelerate the
rising level of the dam thereby hastening the danger of its potential
collapse, which could mean tragic death and nightmare to the downstream
communities along the Abra River.
This danger is compounded by the fact that the Tailings Dam 5-A
is located within the Splay of the Philippine Fault which overlaps
the Abra River. As to the geological location of the new project,
“the Teresa deposit trends north-south along a series of parallel
structures that seem to have continued, after it was displaced by
a fault, to the northeast trending Victoria veins. In a regional
scale, the Teresa is localized within the northwest to north-south
trending Abra River fault that extends to Palidan and Suyoc areas
south of Nayak” in Mankayan, Benguet.
In addition to the underground mined-out areas causing land mass
movement, the total of 114 holes (50 surface and 64 underground)
as a result of Lepanto’s drilling operations since 1969 until
2003 make the situation in Mankayan more alarming.
This is an all-out perpetration of capitalist plunder and ethnocide
that dooms the indigenous peoples and peasants. Before this happens,
we have to end this Lepanto menace. It should not be a question
reserved for tomorrow. It is an answer of intensifying mass protests
and struggles to put Lepanto down to its grave and make it pay for
the injustice committed against the people. #
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