Court fight looms over $5.9-B mining operation

by Jonathan L. Mayuga, BusinessMirror

Posted at Dec 03 2012 07:57 AM | Updated as of Dec 03 2012 03:57 PM

MANILA, Philippines - Sagittarius Mines Inc. (SMI) may have to go to court to clear the road for the operation of the $5.9-billion Tampakan copper-gold project in southern Mindanao.

Two senior members of the South Cotabato provincial board—Agustin Dema-ala and Ernesto Catedral—said over the weekend that they agree with an opinion of the Department of Justice (DOJ) on the impropriety of the provincial ban on open-pit mining, adding that they will support South Cotabato Gov. Arthur Pingoy’s decision on the matter.

The DOJ cited jurisprudence and issued Memorandum Circular 2012-181, stating that “the power of local government units to pass ordinances and resolutions is merely a delegated power coming from Congress, and that ordinances should not contravene an existing statue enacted by Congress.”

“We will let the courts decide once a case is filed against the province,” Catedral said.

This leaves either the Department of the Interior and Local Government (DILG), which sought the DOJ’s opinion on the issue, or the SMI itself to go to court to have the provincial ordinance voided or invalidated.

“We respect the opinion of the DOJ and we will support the actions of the governor in response to this opinion,” Dema-ala said.

He and Catedral were referring to DOJ Opinion 87, Series of 2012, empowering the DILG to file cases against local government officials who will enact local ordinances that are “contrary to the Constitution and to the laws” on the grounds of grave abuse of authority” and “grave misconduct.”

In its opinion, the DOJ said that for an ordinance to be valid, it must past the test of constitutionality and the test of consistency with prevailing laws.

The opinion was sought by the DILG to clarify the conflict between the South Catabato provincial ordinance banning open-pit mining, which is allowed under the Philippine Mining Act of 1995.

This prevents SMI from operating the mine because the Department of Environment and Natural Resources- Mines and Geosciences Bureau has denied the company’s application for the issuance of an environmental clearance certificate (ECC) for the Tampakan copper-gold project twice already, owing to the existence of the open-pit mining ban.

SMI intends to operate an open-pit mine in its 10,000-hectare mining tenement, situated in three Mindanao provinces, which include South Cotabato.

Pingoy “said that he will respect the law and will not implement the ordinance if it has been deemed invalid,” Dema-ala said.

Catedral, chairman of the committee on environment and legal concerns, said the DOJ was correct in citing the provincial ban on open-pit mining as “ultra vires“ against the mining law.

Aside from an ECC, SMI needs to clear other stumbling blocks, such as the social acceptability of the project to indigenous peoples who have ancestral rights over the mining tenement.

Also, land access is another issue because parts of the mining tenement are covered by the Comprehensive Agrarian Reform Program, with around 3,000 farmer-beneficiaries having been issued their certificates of land ownership award.

Another issue the company needs to settle is the fiscal regime, which involves taxation. The windfall tax that the company insists on implementing for the Tampakan project under the old mining law no longer has legal basis under the current mining law.