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Metal Casting Technologies : March 2005
31 METAL Casting Technologies March 2005 Environmental control that is factored into legislation is largely responsible for this phenomenon! BACKGROUND he Philippines sits on the "Ring of Fire," a geological line of volcanic arcs composed of about 75 percent of the world's volcanoes, both active and dormant, encircling the Pacific Ocean that is associated with rich deposits of copper, gold, nickel, and other minerals. In 1980, the Philippine mining industry accounted for over 20% of the exports of the country. Historically, the Philippine Metalcasting Industry's Steel Foundry Sector sold about 75-80 percent of its casting production to the mining industry, including the cement industry. The political turmoil, nationalistic policies, and legal uncertainties of the mid-1980s sapped foreign interest in mining. The Philippine Constitution of 1987 reserved almost all forms of natural resource extraction to Philippine firms (at least 60% Filipino-owned), although it allowed foreigners to provide "technical or financial assistance for large-scale exploration, development, and utilization of minerals," but not both. Mining's share of national output, employment, and tax revenues plummeted and minerals now make up only 1.7% of exports. This development adversely affected the Metalcasting In-dustry's Steel Foundry Sector that serves the Mining In-dustry, so much so that some large foundries slowed-down in operation, if not forced to stop altogether. REVIVAL MEASURES In 1995, a Mining Act -- Republic Act 7942 -- was passed by Congress with the primary purpose of providing the legal framework for foreign investments in the Mining Sector with improved provisions for environmental protection that are much better than the old laws governing mining operations. However, this was contested by NGOs before the Supreme Court for being unconstitutional as it allowed foreign corporations to enter into service contracts covering both fi-nancial and technical aspects of mining operations giving them virtual control, if not ownership, of the mining projects. The foreign mining corporations may indeed have both the financial and technical capability to undertake large-scale mining operations that no single Philippine mining company nor the government could do; but the Constitution is very specific about the exploration, development, and utilization of natural resources being under the full control and supervision of the State. COURT RESOLUTION In December 2004, the Supreme Court did not declare the Mining Act of 1995 unconstitutional, but chose to nullify the particular provisions that it found unconstitutional. The fear was that if the law were declared unconstitutional, the country would have to revert back to the old laws that were much worse as far as the provision on environmental protection is concerned. The Supreme Court ruled that large- scale development of mineral resources is legal and "does not contravene the Constitution." Huge mining ventures appear to be beyond the capability of local capitalists as each large-scale venture is said to require at least PHP1 billion in investment. Later moves for reconsideration of its decision were put to rest by the Supreme Court as it drew the final curtain on this matter. "Further discussion of these issues would not serve any useful purpose as it would merely repeat the same justifications and reasons already taken up," said the SC on its ruling. It pointed out that after a "thorough deliberation" of the motion, none of the members of the court have changed their opinions or votes. "Indeed, all the conceivable aspects of this case have been extensively taken up and addressed during the court's lengthy and purposeful debates and deliberations," the SC said. The decision was very timely as it was only recently that the Arroyo Administration announced that it would actively promote mining as an area for foreign investments, since mining was also identified as having great potential for bringing development to Mindanao. The impact of this development is now being anticipated in the Metalcasting Industry's Steel Foundry Sector as a revival of mining operations would naturally resuscitate and stimulate this floundering foundry sector. The sector is presently in a stir. OUTCOME Following the Supreme Court ruling upholding the constitutionality of the Mining Act of 1995, many foreign companies have committed to pour in some US$3.1 billion into the country. It is expected that the revitalization of the mining industry, which had been on the decline for the past 20 years, could yield about PHP57 billion in tax revenues for the government. Infrastructure programs are shifting to high gear in identified mining areas. Ports are being upgraded to service the needs of investors. Australian firms Indophil Resources NL and Climax Mining Ltd. said they have committed to invest nearly US$800 million in the Philippines' newly liberalized mining Happy days seen for steel foundries By Prof. John Hermes D. Bautista, PMAI Technical Consultant.