Mining: Seeing It In An Economic Perspective

An article published in ABS-CBN News' website, authored by Nathalie Blanco briefly talked about the issue concerning the mining in Palawan. Quoted from her article, it says,

"Mining in Palawan is said to have destroyed forests and caused siltation of water sources, causing farmers and other Palaweños to cry for help in protecting their land. While mining provides job opportunities for some, the degree of damage to the earth, on the livelihood of farmers and Palaweños’ general well-being has become exceptionally alarming."

Basically, the article talked about how the activity had affected the people, both farmers (and people who are negatively affected by the activity) and those who are working for the mining companies that are engaged in the activity.

First, the article talked about how the activity is affecting the the lives of the farmers near the area. They said that the topsoil is now underneath the laterite (red residual soil formed by the leaching of silica and by enrichment with aluminum and iron oxides, especially in humid climates). Because of this, the rice grains have lost its nutrients thus becoming useless. Their harvests have decreased; therefore they don't have much money from what they have harvested. Due to this effect, they are against the activity.

Second, the article talked about the point of view of a miner. With his job, he was able to receive a large amount of money, send his children to school, and even had benefits from his job. His life was largely opposite from those of the farmers.

Third, the article talked about how people were against the mining activity in Palawan. Gina Lopez, Executive Director of ABS-CBN Foundation voiced out,

"You are killing where we are number one. And what happens after mining? Nothing. The minerals are taken from ours, brought to other countries. How do we benefit in that situation?"

Another thing that was pointed out in the article was, there was a permit granted by the DENR and Provincial Government of Palawan to have the mining activity pushed through.

Lastly, the article promoted the campaign against mining in Palawan by encouraging people to sign for the petition at www.no2mininginpalawan.com.

I had limited knowledge about this issue before. And with some research, I was able to see the most common concern of the people who protest about the activity; and that is the environment. I've briefly read some articles and it talks about the same thing. If there are any articles that wrote about the mining in Palawan in an economic perspective, it would probably be only 1% of all the articles written. Upon my research, I have stumbled upon a blog site that talks about the effects of mining on the environment (specifically in Palawan). As the blog informs, mining impacts generally on air, water, land and ecosystem. I will not be elaborating such topic anymore since it is already stated in the blog that I've mentioned and my primary purpose of writing this blog post is to let you see through the lenses of Economics with regards to this issue.

Why is there a need for mining companies to dig up all the resources underneath the earth? Simple: to make money. And why does these companies need to make money? Well, it's very obvious.

Mining has a very high risk. We don't know if it will successfully pay off or not. Anything can actually go wrong during the process.

I would like to answer Miss Lopez's questions that was quoted earlier.

"And what happens after mining? Nothing."

In my opinion, she has a very negative outlook on this activity. She only perceives the physical result. Yes, nothing will be left after mining, just some holes  in the earth. But, I would say, mining can help the Philippines boost economically.

"The minerals are taken from ours, brought to other countries. How do we benefit in that situation?"

Minerals are taken from ours, and yes, exported to other countries. How do we benefit from this situation? There's a simple answer to that. Attraction. Foreigners will be highly attracted to the Philippines. A lot of potential investors  will invest in our country. Thus, it will boost the Philippines economically.

High risk means high returns.

That is one of the rules in Economics. And yes, it has been proven many times. Even in the littlest things. Mining has high risks, but the returns are possibly overflowing. It might even help the country take a step further and develop more.

Looking at the latest Philippine Stock Exchange (PSE) stock prices of the mining companies, there are high volumes. Also, you can see that the cost of each stock is very low. Now, imagine buying high volume stocks at low prices. Risks are inevitable. But when you calculate, slight increase in price causes high returns due to the high volume you have bought. We know that investing plays an essential part in a country's economy. And somehow, mining activity can contribute to that, by attracting investors to invest in the mining category.

PSE Stock Prices (Mining Category) as of January 11, 2013
Source: http://business.inquirer.net/102187/philippine-stock-market-table-as-of-january-11-2013

Even if this is so, you might wonder about the aftermath of the activity. Most of us may not know about Republic Act No. 7942. This act is also know as Philippine Mining Act of 1995. It is quite long and there a lot of provisions. But I would like to stress out a section of this act which solves the concern of most people with regards to the said mining activity.

"(k) Requiring the prominent to effectively use appropriate anti-pollution technology and facilities to protect the environment and to restore or rehabilitate mined out areas and other areas affected by mine tailings and other forms of pollution or destruction;"

This is quoted from  Section 35 which tackles about the Terms and Conditions of mining. It is explicitly stated in this term that after mining, the area should be rehabilitated and during the process, the company must use appropriate equipment that doesn't contribute to pollution. I think a lot of people are missing out this point. Mining is not just about destroying. Think of it as a person having their blood taken from their body. Sounds inappropriate right?  Actually, it's healthy for the person since it his body would regenerate fresh new blood cells. It's just the same logic. Mining-wise, even though it would take a long time, it is possible that the area that has been mined would become a better place after it has been rehabilitated. 

I have heard a lot of comments and violent reactions from my fellow citizens. All they do is oppose. All they do is blurt out words. They only produce words yet a single action wasn't even done. I do think that people must be educated about Economics so that they would understand why and understand how. They complain because they lack knowledge of  of Economics. Also, people are only concerned with the environmental aspect of the issue. Why can't they just see it in a 360-degree perspective before even judging? A coin has always two faces.

I am not actually against the mining activity in Palawan. But I'm also not for it. I see its advantages and disadvantages. It may be pushed through as long as benefits will exceed cost, not only in monetary terms. I may have sounded harsh with the criticisms I have laid out, but this is the truth. I would suggest that people must be open-minded to such issues concerning our country. It would be a better way rather than just give out initial reactions. Think critical.