SC decision strikes down Mining sector’s recovery

In another controversial decision, the Supreme Court declared unconstitutional some provisions of the Mining Act of 1995 (Republic Act 7942), specifically those which allow foreign companies to wholly own a mining company in the country and obtain equal rights to control and exploit the country’s mineral resources that as a matter of principle should only be given to Filipinos. The SC decision has, in effect, scrapped sections which contain provisions that will attract foreign companies to go into mineral exploration in the country.

The mining industry, as expected, expressed big disappointment over the decision. After all, before the law’s enactment in 1995, the cash-strapped local mining industry waited long for a law that would liberalize the industry as well as give incentives that will lure foreign investors. With the passage of RA 7942, foreign mining investors came in and brought huge amounts of money into mining exploration. But this may just go largely to waste because of the unfavorable ruling of the High Tribunal, yielding to the petition of anti-mining advocates filed way back 7 February 1997.  Specifically, the SC ruling may threaten both existing and proposed minerals development projects with foreign participation. These projects, along with others in advanced stages of exploration, are estimated to bring in US$5 billion in total potential investments.

Aside from nullifying some of the law’s provisions, the Supreme Court also voided the FTAA given to the Australian-owned Western Mining Company of the Philippines (WMCP). On 30 March 1995, the government granted an FTAA to WMCP covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. Noteworthy, WMCP’s FTAA was years earlier assumed by Tampakan Mineral Resources Corp. (TMRC), a firm 60% - owned by local investors and the rest by the Australian firm Indophil Resources NL.

On a related development, the government through the Department of Environment and Natural Resources (DENR) seeks to reverse the SC decision by filing a motion for reconsideration in the High Tribunal. In the case of TMRC, should the High Tribunal reject the petition for reconsideration, TMRC can still operate on the basis of the firm’s previous Mineral Production Sharing Agreement (MPSA) granted by the DENR. But under the MPSA scheme, a mining firm is only allowed to conduct operations in at least 5,000 hectares, thus greatly reducing TMRC’s area of operation.

The government’s opposition to the SC decision is expected as it adversely affects its revitalization program for the minerals industry. For one, the Supreme Court decision virtually negates Executive Order 270 (National Policy Agenda on Revitalizing Mining) issued by President Arroyo last 16 January, declaring that RA 7942 upholds the country’s sovereignty and shall serve as the framework for the government’s mining policy.

Preparing for water shortage in Metro Manila

Metro Manila water concessionaires Maynilad Water and Manila Water Company are prepared for the looming water shortage. The impending water crisis is due to the critical water level of Angat Dam, which fell three meters below the minimum of 204.6 meters in January. The National Water Resources Board (NWRB) has already cut by five percent the water supplied to the Metropolitan Waterworks and Sewerage System (MWSS) which allocates the supply to the two concessionaires.

Both Maynilad and Manila Water which service the west and east zone, respectively, are closely monitoring water allocation so no area suffers from lack of water supply. If supply gets tight, the concessionaires may have to cut supply in some areas and divert it to elevated places, particularly to some parts of Quezon City, Pasig City, and Mandaluyong City, and to distant areas like Taguig. It is possible that service can be reduced to just one to two hours a day if supply to MWSS gets cut by ten percent. The concessionaires say they are ready even if supply gets reduced by 20%.

In some places in the west zone with little or no water supply, Maynilad has resorted to delivering water supply through mobile tanks. Another way to conserve water according to the concessionaires is to reduce systems losses by plugging the leaks and cutting off illegal connections. While Manila Water’s non-water revenue has been reduced when it won the concession in 1997 – it is still high at 51%. On the other hand, Maynilad’s systems losses stand at 60%.

By March, the government will reduce MWSS’s water supply from Angat to 39.1 centimeters (cms), then to 36.8 cms in April from 43.7 cms in December. The government says unless rains add water in Angat through a typhoon or cloud-seeding operations, the water level could go down to 175.23 meters, the same level recorded in 6 July 2002.

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