Enhancing Business-Community Relations Silangan Mindanao

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Enhancing Business-Community Relations


Silangan Mindanao Exploration Case Study




        by Charmaine Nuguid-Anden1

              September 2003

          www.new-academy.ac.uk
            www.pbsp.org.ph
              www.unv.org
`Enhancing Business-Community Relations'  Silangan Mindanao Exploration Case Study, Philippines




         Contents

 1. Introduction....................................................................................................................................2

 2. Engagement Profile........................................................................................................................3

 3. Digging for Gold, Engendering Trust ..........................................................................................3

 4. The Birth of the CTWG ................................................................................................................5

 5. The CTWG: Working Together for Mutual Gains ....................................................................6

 6. Analysis ...........................................................................................................................................7

 7. The Way Forward.........................................................................................................................9




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`Enhancing Business-Community Relations'  Silangan Mindanao Exploration Case Study, Philippines




      A Joint Venture of Philex Mines and Anglo-American Exploration Phils.
                        Building Community Partnerships:
         The Community Technical Working Group (CTWG) Experience



      Research Project Background
  This case study is one of ten that were chosen as part of the `Enhancing Business-Community
 Relations' project in India implemented in collaboration with Philippine Business for Social
 Progress (PBSP). These cases document examples of engagement between businesses and
 communities and can be used as learning tools for the promotion of responsible business practice
 and sustainable development.
  The Enhancing Business-Community Relations project is a joint international initiative between
 United Nations Volunteers (UNV) and the New Academy of Business. Implemented in seven
 developing countries, the purpose of the initiative was to collect and document information on
 business-community practices as perceived by all stakeholders, build partnerships with them and
 promote corporate social responsibility practices. It is also intended to enhance international
 understanding of business-community relations through information sharing and networking with
 other countries especially those participating in the project - Brazil, Ghana, India, Nigeria,
 Philippines, South Africa and Lebanon.
  The findings and recommendations reflected in the case study are those of the author and do not
 necessarily reflect those of UNV, PBSP or the New Academy of Business. It is important to note
 that these cases were written as examples of business-community initiatives. They do not constitute
 a comprehensive assessment of the company's social responsibility.


      1. Introduction
  The Philippines is gifted with considerable mineral deposits, particularly of gold, copper and
 nickel, and other metallic and non-metallic minerals. Throughout the years, the government has
 allowed, some would say encouraged, exploration and mining activities. Weighing the economic
 benefits of the mining industry against the possible risks to the environment typifies the
 development dilemma. Thus, the decision to allow mining is always a crucial one. In the Mining
 Act of 1995, the Philippine government managed a tight balancing act when it declared,
      " it shall be the responsibility of the State to promote the rational exploration,
      development, and utilization of all mineral resources through the combined efforts of
      government and the private sector in order to enhance national growth in a way that
      effectively safeguards the environment and protect the rights of affected communities."
   In a traditionally controversial industry as mining, the government, the private sector and the
 community represent varied but not necessarily conflicting interests. While the mining industry has
 traditionally contributed substantially to the gross domestic product, there is a need to ensure that
 such economic benefits are enjoyed by all, and that local residents are informed and involved in
 decisions that affect not only their livelihood but also their immediate surroundings. The Mines and
 Geosciences Bureau, in performing the fresh mandate given by the Mining Act of 1995, is in the
 process sharpening its capacity to rationally administer mining contracts in a way that benefits the


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`Enhancing Business-Community Relations'  Silangan Mindanao Exploration Case Study, Philippines


 community without needlessly jeopardizing the environment. Mining companies meanwhile are
 increasingly concerned about the environmental impact of their operations while tapping natural
 resources to contribute to economic development.
   The key is in identifying mutual interests and finding a way to work together. This case will show
 how a voluntary and multi-stakeholder group provided the mechanism for the Silangan Mindanao
 Exploration Company, Inc. (SMECI), the Mines and GeoSciences Bureau in Region XIII (MGB
 RXIII) and the host communities to jointly address concerns on the possible impacts of the
 exploration project. Finally, the case will illustrate how early stakeholder engagement and
 transparent relations between business and communities make for sound business sense.


      2. Engagement Profile
  Silangan Mindanao Exploration Co. (SMECI) is a joint venture of Philex Gold Philippines, Inc.
 (PGPI) and Anglo American Exploration Phils. Inc (AAEPI) formed in September 1999 specifically
 to conduct exploration activities in the Surigao Gold District. PGPI is a subsidiary of Philex Mining
 Corporation that currently operates one copper-gold mine. It is one of the leading copper exporters
 in the Far East. It is a publicly listed company in the Philippines and its gold subsidiary, Philex
 Gold Inc. is listed at the Toronto Stock Exchange. AAEPI is one of the world's largest producers of
 platinum, gold, diamonds and other minerals. Copper and gold exploration activities in the area,
 started in 2000, include geologic mapping, geo-chemical surveys, geo-physical surveys and drilling.
 In the joint venture, Philex is responsible for environment and community development while
 AAEPI manages actual exploration activities.
  The Mines and Geosciences Bureau in Region XIII. The MGB, a line bureau of the Department of
 Environment and Natural Resources (DENR), is expressly mandated by the Mining Act of 1995 "to
 have direct charge in the administration of disposition of contracts, agreements or permits relating
 to mineral lands and mineral sources (Section 6, DENR AO 23, Series of 1995). MGB XIII has
 jurisdiction in the project site in Surigao del Norte in the CARAGA Region of Southeastern
 Philippines.
  Barangays2 Timamana and San Isidro in the municipality of Tubod are the host communities.
 Lying in the eastern portion of the Surigao Gold District (SGD), the adjacent barangays are no
 strangers to mining. While primarily agricultural, with 95% of the combined area of the two
 barangays planted to rice and coconut, the presence of the ore-rich mountains bordering the
 barangays have accustomed the population to mining, both to its costs and benefits. While most of
 the residents had been anticipating the discovery of precious minerals in their midst, and awaiting
 the economic windfall this would bring, a few teachers and a local water organization were
 concerned about the possible negative effects of the project on the environment, particularly on
 their water source.


      3. Digging for Gold, Engendering Trust
  Philex Gold became interested in seriously exploring the so-called Surigao Gold District after
 preliminary assessments made in the early 1990s. At the end of 1999, a Mineral Production Sharing
 Agreement (MPSA) permit had been granted to Philex and later transferred to the recently formed
 SMECI to explore 402 hectares in northeast Surigao.
  While the residents had heard of neighboring communities' negative experience with other mining
 companies, Barangay Captain Edeltrudo Nalitan of Timamana said that the residents are pragmatic
  they know that mining is a reality in their lives. Thus, they were not surprised when they found


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`Enhancing Business-Community Relations'  Silangan Mindanao Exploration Case Study, Philippines


 out in 2000 that a mining company had been awarded the right to explore for ore in their mountains.
 However, as the permit was issued at the national level (through the DENR), local communities felt
 that they had been left out of decisions, which directly affect their lives. Further, it seemed to them
 that there were few available mechanisms by which they can voice their concerns on the exploration
 activities.
  SMECI acknowledged the need for information and the mixed feelings amongst local residents
 and stakeholders that surround exploration activities. Given Philex's years of mining experience in
 the North, it was well prepared in meeting the challenge of working with the communities and
 stakeholders. It rolled out an Environmental and Community Development (ECD) Program guided
 by its mission statement of "upholding at all times a sound environmental policy and fulfilling our
 obligations to the community as a responsible corporate citizen."
  Philex's core strategy is hinged on engagement with the community. "SMECI is committed to
 forge willful partnerships with host communities to help improve the quality of life and promote
 sound environmental management." This is implemented through the "active and meaningful
 participation of stakeholders through community consultation and planning."
  The ECD has several components: The Information, Education and Communication (IEC)
 Program is being implemented primarily by three community organizers who had been living in the
 area to immerse themselves in the community way of life. Through focus group discussions (FGDs)
 and informal meetings, they had been in touch with the community's needs and perceptions
 regarding the exploration activities. Philex's Head for Environment and Community Development
 Department (ECD) became the focal person for easing in the SMECI's activities in the local
 barangays by coordinating closely with local government offices. Visits to Philex mining operations
 and host communities in the North were sponsored to give stakeholders and local leaders a first-
 hand view of how Philex manages its projects. The Chairman/CEO of Philex, likewise, had been
 visiting the communities and meeting with local officials and sectoral leaders to listen to and
 address their concerns, apprehensions and suggestions. A Community Information Center is being
 maintained to facilitate access and communication between company and the community.
  Philex takes community relations a notch higher: it invests toward community development. It is
 voluntarily implementing a Community Development Plan in consultation with the residents (see
 Box 1).


                           Box 1: SMECI Community Development Plan
                    Information and Communication Education Campaign
           Community Organising: Strengthen or organise people's organisations
          Water System Improvement: Improve water supply & safe drinking water
                   Assist in improvement of school facilities / infrastructure
        Donation of community requested materials for improvement of public facilities
             Tree and Vegetable Nursery Maintenance and Seedling Distribution
                Scholarship program for elementary and high school students
                   Health: Sponsorship of medical Missions and Donations


  But still, MGB XIII monitoring reports showed brewing opposition to the company's activities
 from a small group of residents, particularly on the possible effects of the drilling activities on the
 community's water source and supply. However, the reports noted too that the majority of residents
 wanted the company to continue its activities in order to ascertain whether a sizeable gold deposit
 did exist.


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