World Rainforest Movement

Philippines: Deforestation through mining subsidized by CDM project

In the Philippines, mining, along with logging, has been among the forces behind the country’s loss of forest cover: from 17 million hectares in 1934 to just three million in 2003 or an 82 per cent decline. While about sixty per cent of the country’s land area was covered with forest seventy years ago, now it is less than ten per cent. (17) And with over half of ongoing and planned mining operations located in areas that are ecologically highly vulnerable and with over a third of approved mining and exploration leases located in intact forests (18) — much of the little that remains could be lost to extractive industries such as mining.

In addition to contributing to global climate change, mining has a devastating impact on local communities. Denuded forests, degraded mountainsides, and polluted rivers and seas have resulted in residents being driven from their lands, deprived of access to food, water, and livelihood, and exposed to harmful chemicals. Over the years, a series of large and small mining disasters have inundated rivers, irrigation systems, and farmlands with toxic mining residues, killing fish, aquatic life, and crops, and threatening public health. More than 800 mine sites litter the countryside — contaminated but abandoned. Apart from the ecological destruction, the militarization accompanying mining projects has spawned violence and human rights abuses.

Because many mining operations take place in upland areas, mining’s impacts have been borne disproportionately by one sector that has been more marginalized than others: indigenous peoples. As much as half of all areas being claimed by mining companies for their operations are areas considered ancestral lands by indigenous peoples. Numerous cases of indigenous peoples being displaced from their lands and cut off from their sources of livelihood have been documented. Under the law, no mining can commence without their consent; in practice, mining companies have used their resources and connections to skirt this requirement, buy off support, and divide indigenous communities.

And yet, those mining companies, the very agents of deforestation, are being rewarded by Clean Development Mechanism (CDM) projects – a scheme that allows developed countries to buy “credits” from projects that supposedly reduce greenhouse gas emissions in developing countries, instead of cutting their own emissions domestically. Each CDM credit represents a payment made by a corporation in a rich country for a poor country not to use the limited resource so that the former can use this resource for itself.

The largest CDM project in the Philippines to date, the Montalban Landfill Methane Recovery and Power Generation Project, illustrates the tangle of corporate interests caught up in polluting, carbon-intensive, resource-extractive activities to be rewarded by the CDM. Accounting for around half of all CDM credits from the country, the project claims to “reduce” emissions by around 5.9 million tons worth of carbon dioxide in ten years by capturing and converting methane from trash to electricity.

The project is run by a subsidiary of Nickel Asia Corporation, the Philippines’ largest nickel mining company. Nickel Asia was founded and is owned by mining magnates Salvador and Manuel Zamora, of the wealthy and influential Zamora family. Manuel and Salvador are respectively ranked 20th and 32nd richest men in the Philippines according to Forbes magazine. The two have a combined net worth of nearly $200 million, or the equivalent of the average annual income of around 55,000 Filipino families. Manuel was former president and present director of the Chamber of Mines of the Philippines, the mining industry lobby group.

Nickel Asia has four subsidiaries that own equity or operating interests in various mining operations across the country. The vice-chairman of one of these subsidiaries is Philip T. Ang, the country’s 33rd richest individual. Nickel Asia also has minority interests in Coral Bay Nickel Corporation, the majority of which is owned by a Japanese consortium and ran by Sumitomo Metal Mining Corporation, Japan’s top nickel and second largest copper producer. Together, these subsidiaries dominate the local nickel mining industry, with a combined net income of nearly 15 billion pesos in 2007 — over a billion pesos more than the budget of the government’s own environmental regulatory agency, the Department of Environment and Natural Resources (DENR).

Apart from chairing Nickel Asia, Manuel Zamora has also been a member of the board of Philex Mining Corporation, the country’s largest copper and gold mining company. Philex has mines in Negros Occidental and Zamboanga and ongoing operations in Benguet and Surigao del Norte. In Zamboanga, it has a coal mining project with about two million tons of coal reserves. It is also into oil and gas exploration. Half of Nickel Asia’s shares is owned by Luis Virata, the country’s 15th richest man. He also sits on the board of another mining firm, Benguet Corporation, the Philippines’ oldest mining company.

The Zamora mining operations are accused by environmentalists and indigenous communities, and local residents of undermining laws protecting forests, displacing indigenous peoples, poisoning water sources, and cutting-off people from their means of subsistence. In one mine, it has even been implicated in direct violence against residents opposed to its operations.

With the CDM, the Zamoras and their CDM venture partners can expect to earn 0.3 billion to 1.7 billion pesos a year in estimated revenues from their Montalban project — as much as ten per cent of all their income from mining in 2007 and more than the individual incomes of their Cagdianao or Rio Tuba mining operations. This provides proof that the CDM’s impact on its developers’ consolidated financial sheets may not be negligible.

Not only is the CDM subsidizing activities that promote climate change, it is also boosting the profits of some of the very parties most responsible for perpetrating deforestation and environmental degradation. Indeed, it’s a Costly Dirty Money-Making scheme.

Excerpted and adapted from: “The CDM in the Philippines: Rewarding Polluters”, Herbert Docena, Focus on the Global South, http://focusweb.org/philippines/content/view/334/7/;  “Costly Dirty Money-Making schemes”, Herbert Docena, Focus on the Global South, June 2010, http://www.thecornerhouse.org.uk/sites/
thecornerhouse.org.uk/files/CDM%20Philippines.pdf