Impact of the Philippines’ elections on the mining sector - part one

 Allan and Associates, a security risk management consultancy based in Hong Kong, has assessed the implications for the mining industry based on the known policies and priorities of an administration led respectively by any one of the three leading contenders.

Philippines Snapshot
• The Philippines is one of the world’s greatest mining provinces, and one the hardest for foreign mining companies to access and thrive in.
• The country’s underexploited mineral wealth has an estimated value of more than US$840 billion, an amount if realised and well-invested in hard and soft infrastructure that could help transform the Philippines and act as catalyst for a national renaissance.
• In order to achieve anything approaching such an outcome, the state and much of the population will have to demonstrate a willingness to encourage and retain the foreign investment and technology required to exploit and eventually process the nation’s mineral bounty.

Political risks facing the Philippines mining sector
There are nine candidates in the Philippine presidential elections. The three leading contenders are Senator Benigno “Noynoy” Aquino III of the Liberal Party; Senator Manuel Villar of the Nacionalista Party and former President Joseph Estrada of the Puwersang Masa Party (PMP). Former Defence Secretary Gilberto Teodoro, the standard bearer of outgoing President Gloria Macapagal-Arroyo’s party, Partido Lakas-Kampi, is a distant fourth.
Five other candidates - Senator Richard Gordon of Bagumbayan, Senator Jamby Madrigal (independent), evangelist Eddie Villanueva of Bangon Pilipinas, Olongapo City Councillor JC De los Reyes of Ang Kapatiran, and environmental activist Nicanor Perlas of Pangmasa - are all considered distant outsiders.
To date, the elections appear to have been generally well conducted, barring some violent incidents and a number of other poll related disruptions and offences. The speed of the count and its outcome is the next phase that could lead to instability, particularly if the early results suggest that Aquino’s status as the most favoured candidate to win the presidency is under threat.

Aquino presidency
Senator Benigno “Noynoy” Aquino III, 50, is the son of the murdered national hero Benigno ‘Ninoy’ Aquino and the recently deceased former president Corazon Aquino. He is the favourite to win the presidential election.
In 1998, ‘Noynoy’ Aquino ran for a seat in the House of Representatives and won, serving as Congressman of the second district of Tarlac until 2007. He served on numerous committees as a member of Congress and as deputy speaker from November 2004 to February 2006. In May 2007, he won a seat in the Senate and was placed sixth in the national elections. At the Senate, he chairs the Committee on Local Government and is also the vice-chair of the Committee on Justice and Human Rights.
Aquino had a relatively poor track record as a legislator in his three terms as a congressman and one term as a senator. He has authored only nine bills, two of which remain pending. However, he is extremely popular among the electorate, heading almost all the credible opinion polls. The public perceives him as an extension of his parents, an honest official and a fighter against corruption, if not nepotism.
Aquino’s popularity contrasts with his lack of a political hinterland that can translate his policy agenda into material reality. This raises the prospect that an Aquino presidency would rely heavily on popular support – echoes perhaps of the 1986 ‘People Power’ revolt that toppled the authoritarian leader Ferdinand Marcos from power and propelled his mother Corazon into the presidency – rather than pursuing coherent strategies intended to provide long term economic and social stability.
This perception is reinforced by the close links Aquino has with ‘progressive’ elements within the Catholic Church and civil society groups, such as non-governmental organisations (NGOs). There is some concern his links within the more radical members of either group can result in an anti-mining administration that would pass laws hostile to foreign businesses.
According to a Green Electoral Initiative (GEI) survey led by EcoWaste Coalition and Greenpeace in February 2010, Aquino was quoted as saying:
“We should review the Mining Act and its implementation, particularly the fiscal incentives, in order for us to maximise the economic benefits of the extractive industry.”
He also noted that mining can be sustainable and that the law should guarantee the exploration, development and utilisation of mineral resources primarily benefit the Filipino people. Mining, Aquino continued, should also provide viable and sustainable livelihood options for communities, ensure gains are maximised for the benefit of the nation without compromising the environment and that local communities are actively involved in decision-making regarding site development while being protected under human rights legislation.
Aquino’s stance on mining may also be evident in the support his campaign has received from the Makati Business Club - which includes major mining interests - on the basis of his supposedly pro-business economic platform.