Historical Sketch of the Mining Industry

A.1 Historical Sketch of the Mining Industry

The role of the mining industry in the development of the Philippine economy has been historically significant. Owing to the highly mineralized setting of the archipelago, traditional placer and lode mining and metallurgy were important subsistence activities of the baranganic natives of the islands since the pre- Hispanic times. Raw gold was a regular trade medium between the "peoples of Ma-I" and exotic Chinese, Japanese, Indian and other Asian traders in the littoral areas, and most of the product probably left the country.

The spirit of Spanish expansionism was at its crest when it reached the Philippines in the second half of the 16th century. Mercantilism as a guiding economic policy impelled Spain to build her wealth from abroad that resulted in the stockpiling of precious metals. The adelantados and their companion frayles sent by the Spanish King to these islands did not find gold in commercial quantities, but in the course of their "pacification campaigns" against the indios (and the latter's obligatory conversion to the Catholic faith), they however continued to explore mining areas.

otwithstanding their three centuries of colonial rule, the Spaniards failed to penetrate the gold-rich due to the Gran Cordillera Central fierce resistance of the Ygorotes. The gold workings and hoard of the yellow metal effectively remained in indigenous hands until the coming of the Americans.

The worthless succession of peninsulares and insulares transplanted by the Crown - unlike the intrepid and ruthless conquistadores of the Spanish New World (viz. Mexico and Peru) - did not have the determination and capability to develop the local mining industry. When Spain lost her empire in the New World during the early 1800s, the Philippines separated by two oceans from the mother country consequently wallowed in economic stagnation and general stupor.

rom the mid-1820s to the mid-1870s, the introduction of liberal economic policies, the opening of Manila to world trade, and the operation of the Suez Canal (that reduced the travel distance between Europe and the Far East), stimulated the colony 's economic growth. In the process, a Filipino middle class originating from the mestizos and scions of the principalia - capped by the ilustrados - had emerged.

And it was by this time (viz. toward the last 50 years of Spanish rule) that Philippine mineral production and trade grew. The Royal Decree of 1837, that was effectively the first Philippine mining law, created the Inspeccion General de Minas under the Governor- General for the purpose of administering all mining activities in the colony. In 1864, the Lepanto Mine - producing copper and gold - was opened.

But the grip of Spanish colonialism had loosened, and whatever economic, political, military and ecclesiastical power it still possessed was obliterated by the outbreak of the Philippine Revolution, the Spanish-American War and the Philippine-American War, respectively. The Treaty of Paris concluded by defeated Spain and the victorious U.S. on December 10, 1898 caused the former to cede her Asian colony (among others) to the latter for a token sum of $20 million. The handover was confirmed by the Spanish- American Treaty sealed at Washington DC on November 7, 1900.

merica at the turn of the 20th century had an expanding industrial system characterized by the predominance of monopoly capitalism and the emergence of the corporation as the dominant type of industrial organization. Its industrial system needed vast sources of raw materials, including energy minerals and base metals, even as its appetite for precious metals did not diminish.

Gold mining in continental America had attained eco- nomic pre-eminence when the U.S. government adopted the policy of monometallism that was pur- sued by most Western nations. And in America's case, this pertained to the use of the gold standard by the federal government to provide stability to her dollar- based monetary system. Armed with sufficient mining geological data, backstopped by an aggressive Min- ing Bureau set up in 1900, and legitimized by the Philippine Bill of 1902 (the country's second mining law), her imperialist mining interests immediately ex- ploited Philippine mineral resources (especially gold), and proceeded with the systematic development of the big mining industry.

Applying superior force and Machiavellian cunning, the North American gringos had vanquished both the insurrectos fighting for the first Philippine Republic and the Cordilleran tribal communities occupying the mineral-rich hinterlands. Among the 70,000 U.S. Army troops unleashed to "pacify' the country between 1898 and 1901 were the veterans of the California and Klondike gold rushes. Upon their discharge from military service, these forty-niners remained in the country to become the vanguard of American big mining interests.

n 1907, Benguet Mine - the first modern gold mine in the country - was established. Subsequently, 17 other adjacent gold mines were opened at the Baguio district. The peak of U.S. colonial rule in the Philippines in the 1930's was considered as the boom years of the Philippine large-scale mining industry, especially in gold mining. In 1936, the country 's third mining law was enacted (Commonwealth Act No. 137) and the Bureau of Mines was also created. By and large, there were 40 operating gold mines producing 30 tons per year up to the outbreak of World War II. In the country's export trade, gold was the third most important commodity, exceeded only by sugar and coconut respectively.

Often, the gold boom in the 1930s was sensationally told as the story of how Baguio was transformed from a vast wilderness into a bustling metropolis. The Baguio district had the largest mineral concentration and most number of prospectors and claimants. But the dark circumstances apropos of the story involved the forcible uprooting of indigenous peoples and other sectors of the rural population by foreign interlopers driven by the auri sacra fames. *

The bulk of displaced members of relatively undisturbed communities engaged in traditional gold mining had to eke out a living through gold-rush mining with a lot of techniques copied from the American forty-niners. Eventually, this ragtag army of gold rushers triggered a parallel "gold boom" within the informal mining sector but whose impact over the local mining industry after 70 years is still very much strong.

But the Japanese invading forces rudely disrupted the Philippine mining boom of the 1930s and early 1940s. World War II wrought tremendous havoc on the mining industry, especially during the invasion and liberation stages.

To carry out the grand imperialist design for a "Greater East Asia Co-Prosperity Sphere", the Japanese war machine commandeered strategic metal ores (e.g. iron, copper, chromite and manganese) to support its war effort and the expanding industries in its homeland, all during the brief but brutal occupation. Many Japanese trading companies that operated in the country during the pre-war years turned out to be fronts of the Japanese war machine, and whose officials and employees were military intelligence officers and spies.

The granting of Philippine "independence" by the United States in 1946 - amid the ruinous post-war era - was immediately followed by the imposition, on a prostrate nation, of the "Parity Rights Amendment" and the "mutually beneficial" Laurel- Langley Agreement on trade and related matters. Ostensibly, the big mining industry was "Filipinized" while being rebuilt. Rehabilitation of strategic gold mines was done in the late 1940s, while copper was explored extensively in the early 1950s. New technologies like open pit mining for large-tonnage, low-grade copper deposits were introduced. The two metals became the pillars of big mining with the establishment of three major mines: Atlas (1955), Sipalay (1957) and Philex (1958). The period 1960-1980 was the "Golden Age" of Philippine big mining, even as the neo-colonial "intimate relations" retained the pre-existing trade patterns and ownership of mining companies by US individuals and corporations. But the imposition of martial law in 1972 by then President Marcos dealt a twin hammer blow to the strongman's oligarchic rivals and to the Philippine status quo. Martial law paved the way for the reign of greed in the mining industry under the pretext of Presidential Decree No. 463 (P.D. 463) issued in 1974 that was in effect the country's fourth mining law. As the Laurel-Langley Agreement and similar colonial relics were about to end in 1974, the Marcos cronies and Marcos himself thrust their grasping hands at the U.S.-controlled big mining in- dustry to grab the mines that sated their whims.

The decade 1980-1990, towards the end of martial law (1982) and the fall of Marcos (1986), was the "Dark Period" of the mining industry. It triggered the painful dying process of large-scale metallic ore mining that was marked by a domino type of shutdown of 14 big and medium-sized metal mines. Low prices for the principal metal products in the midst of a collapsing international market were the immediate causes for the moribund state of export-oriented big mining. As the industry was collapsing, gold panning and small-scale mining made a dramatic comeback. From the mid-1980s through the mid-1990s, the country had borne witness to the meteoric rise of a rag-tag army of 500,000 men, women and children digging and panning for the gold metal.

Once more, the auri sacra fames cast its magic spell. This time, it had transformed Mount Agtuganon/Diwata, popularly known as Mount Diwalwal * from an obscure gold panning site of the Mandaya tribe into a chaotic gold rush town of 150,000 subterra- nean-loving inhabitants. And its gold did not elude the covetous eyes of the Marcos cronies and Marcos himself as they had caused the prompt enactment of P.D.1899 (Small-Scale Mining Law) in 1984. All these had a hand in shaping the more than 50% share of the small-scale gold mining sector in the country's total gold output.

hile the big mining industry was slowly wasting, the Philippine government had been conducting major studies on the country's mineral potentials with the aid of the US, British, Ger- man and Japanese governments as well as that of the United Nations Development Program (UNDP) and the Asian Development Bank (ADB). As a result, the government is over-saturated by voluminous reviews of the country's geology and mineral resources for big mining consumption as well as encyclopedic big mining project studies lying side by side with a moribund big mining industry and a monstrous gold rush phenomenon.

In part, the foregoing formed the basis of the government's policy on liberalizing and restructuring the mining industry ultimately finding concentrated expression in the Philippine Mining Act of 1995 (Republic Act 7942), the country's fifth. The train of big mining-related developments and government actions foreshadowed an impending resurrection of the big mining industry. Apparently, the process is that of an inexorable shift from small-scale and labor- intensive to large-scale and mechanized operations, from a Filipino- to a transnational-dominated mining industry.

As of now, big mining is but a shell of its former self. The Department of Environment and Natural Resources (DENR) admitted that since 2002, there are only eight operating large metal mines.