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Corporate and public governance in mining: lessons from the Marcopper mine disaster in Marinduque, Philippines

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Abstract

The Philippines sits atop vast mineral deposits estimated to be worth around 47 trillion Philippine Pesos. Yet, mining in the Philippines has a mixed track record as far as its impact on human and economic development is concerned. This paper tries to draw lessons from the Marcopper Mine in Marinduque, Philippines, using a framework—what we call a “mining and human development causality chain”—to begin to think through how extractive industries can contribute to inclusive growth. Essentially, there is a chain of inputs and events that—when properly executed by various stakeholders—could lead to very strong economic and human development outcomes not just for the communities directly affected by the mine but also the country as a whole. Too often, this chain is easily broken by (both corporate and government) governance. Using a critical analysis of the Marinduque mining disaster, we illustrate how breaking this chain can completely reverse mining’s potential to assist in human development.

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Notes

  1. While conclusive legal proof of ownership was never established, Marcopper Mine was widely alleged to be partially owned by President Ferdinand Marcos until he was overthrown in 1986. Placer Dome was acquired by Barrick Gold in 2006.

  2. “Barangay” is the smallest political unit in the Philippines.

  3. Elaborating on this strand of literature is beyond the scope of this paper. The interested reader may wish to refer to Arnott et al. (2003) for a discussion of different government and market failures.

  4. Figures are MMC’s own from a 1996 PR campaign. Some of the figures have since been disputed, but they are indicative of the magnitude of the company.

  5. Based on MMC Annual Report 1996, audited, and filed with the Securities and Exchanges Commission (SEC).

  6. One hundred thirty-three of 134 FGD attendees felt that they received no benefit from large-scale mining.

  7. Figures compiled by Provincial Treasurers Office 2006 as part of the provincial government’s legal claim against MMC and Placer Dome.

  8. Information provided in MMC’s audited annual reports filed with at the Securities and Exchanges Commission (SEC).

  9. From the MECEMT report on Boac accident, May 1996 (DENR 1996)

  10. From the MECEMT report on Boac accident, May 1996 (DENR 1996)

  11. Social license to operate refers to the level of acceptance or approval continually granted to an organization’s operations or project by the local community and other stakeholders.

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Correspondence to Tristan A. Canare.

Additional information

The views expressed herein are those of the authors and not necessarily those of the Asian Institute of Management. This analysis herein builds on earlier research materials produced by students of the Asian Institute of Management, in learning team 8 of the Masters in Development Management (MDM) class of 2013, as well as the Management Research Report (MRR) of Mr. John Lindon.

Appendices

Appendix 1

Table 1 Summary of key findings from the Marinduque Focus Group Discussions

Appendix 2. Chronology of events

1956

Placer Development Limited undertakes geological exploration in Marinduque.

1967–1969

Marcopper Mine begins construction in Marinduque. The Tapian pit is commissioned.

1975–1991

Mine tailings from the Tapian pit are dumped in Calancan Bay through pipes from the mine site.

1981

The government issued a “cease and desist” order to stop dumping into Calancan Bay. This came amidst environmental concerns and local protests. President Marcos orders resumption of dumping after an appeal from Marcopper Mining Corporation.

April 1988

Dumping into Calancan Bay stopped for 1 month after the government ruled that the mining firm should find an alternative disposal site for mine tailings. However, then President Aquino orders resumption of mining after Marcopper cuts power in Marinduque. The Calancan Bay rehabilitation program was established, and Marcopper was ordered to pay PhP30,000 per day on rehabilitation.

1991

The Maguila-Guila Creek was dammed to hold back contaminated silt from the San Antonio pit.

1992

The Tapian pit was used to dispose tailings from the San Antonio pit. A drainage tunnel at the base of the pit was plugged with cement, which later fails in 1996.

December 1993

The Maguila-Duila dam collapsed killing two children, displacing 70 families, and contaminating agricultural lands.

March 1996

A drainage tunnel linking the Tapian pit to the Boac River burst, causing over three million tons of tailings to flood around the Boac River and out to sea. The government suspends the mine’s permit (source: Macdonald and Southall 2005).

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Lindon, J.G., Canare, T.A. & Mendoza, R.U. Corporate and public governance in mining: lessons from the Marcopper mine disaster in Marinduque, Philippines. Asian J Bus Ethics 3, 171–193 (2014). https://doi.org/10.1007/s13520-014-0038-3

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  • DOI: https://doi.org/10.1007/s13520-014-0038-3

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