Philippine Rebels Target Miners, Foiling Drive for $6.7 Billion: Bloomberg

September 19, 2007 at 8:21 am | Posted in Uncategorized | Leave a comment

MANILA, Philippines – Jasper, a 28-year-old medic in the New People’s Army, says he’s been fighting Philippine government forces since he was 13. Now he has a new enemy: international mining companies.

The military wing of the Philippine Communist Party last month vowed to increase armed and unarmed efforts to prevent miners such as Xstrata Plc from “plundering” the country’s resources. Last week, the communists rejected President Gloria Macapagal Arroyo’s offer of an amnesty for the rebels.

“Companies or even military detachments that are attacked deserve to be punished,” said Jasper, who asked to be identified only by his nickname for fear of being arrested. “They are all guilty of violating human rights.”

Rebel defiance may stall efforts by overseas miners such as Xstrata and OceanaGold Corp. to develop copper, gold and nickel deposits the government has valued at as much as $1 trillion.

Safety concerns in communist-held areas have helped limit foreign investment in 23 mining projects to a 10th of the $6.7 billion Arroyo targeted in 2004, according to Bloomberg calculations.

“Those businesses that are intending to set up mining operations will be in serious trouble,” said Rey Trillana, a political scientist at the University of Santo Tomas in Manila. “The New People’s Army has the capability to stage attacks. They can disrupt investments, threaten businesses.”

In April, about 50 rebels attacked a gold mine being developed by CGA Mining Ltd., a Perth, Australia-based company, in central Masbate province. A policeman who chased them was killed.

The rebels set fire to old building equipment and planted home-made bombs, later cleared by military, said Johan Raadsma, regional manager at Philippine Gold Ltd., a CGA unit.

The attack was “a wake-up call for us,” Raadsma said in April. “We have not been diligent in communicating to all of the Masbate people the various things we’ve done for the community.”

CGA will invest 10.6 billion pesos ($226 million) in the mine, including 169 million pesos for community projects, said Chief Executive Officer Michael Carrick.

The rebels “seem to not believe that the mining industry can make a difference in the development of the countryside and alleviating poverty,” said Nelia Halcon, vice president of the Philippine Chamber of Mines, which represents more than 100 companies.

Overseas miners abandoned Philippine exploration projects in the 1980s because of declining metals prices. Arroyo vowed to lure them back in 2004 after the Supreme Court upheld a law that allows foreigners to own 100 percent of mining companies.

So far, seven of the government’s 23 priority mining projects are being developed by international companies. Zug, Switzerland-based Xstrata and OceanaGold, a Melbourne gold miner, are the only two with market values of more than $130 million.

Xstrata hired experts to assess security risks to employees before buying 63 percent of the country’s biggest copper and gold mine on southern Mindanao island in December, said Neal O’Connor, general counsel at Xstrata Copper in Brisbane, Australia.

“The bottom line is, we were aware of the region we were going into,” O’Connor said.

A Maoist group, the New People’s Army has 27 battalions of full-time fighters, according to the Communist Party’s Web site. The U.S. State Department, which in 2004 named the Communist Party and the New People’s Army as terrorist groups, estimates the rebel forces at 10,000.

Philippine authorities blame them for 40,000 deaths, mostly of soldiers, since the rebellion began in 1969. The Communist Party says 60,000 have died during military and police campaigns.

The rebels aim to protect Filipinos from exploitation by “foreign monopoly capitalism, domestic feudalism and bureaucrat capitalism,” according to the Web site.

Fighters move between small camps in the mountains, where the Philippine army can’t penetrate, Trillana said. The rebels flourish among the poor in a country where 40 percent of the 87 million people live on less than $2 a day, he said.

“The NPA was founded on a legitimate ideology,” Trillana said.

“Some segments of the movement have resorted to extortion and kidnapping, but it’s hard to label them a terrorist group.”

Jasper said he was trained from age 13 to provide medical care to the poor. Four years after he was captured by the military, Jasper is heading back to the mountains. Rebel spokesmen didn’t respond to calls and e-mails seeking comment.

Wherever overseas miners start operations, the New People’s Army emerges, said Jogy Fojas, deputy chief of staff of the Armed Forces of the Philippines. Members charge a “revolutionary tax” to let companies operate without interference, Fojas said. Demands are accompanied by bomb threats.

“Terror is the nature of their activities,” Fojas said.

The best weapon against the rebels is to let local residents share the benefits of mining, said Leuvino Valencia, a vice president in the Philippines of Gatwick, England-based G4S Plc, the world’s second-largest security company.

“The higher your spending on community development, the lower the risk of an attack and the less you need to spend on security,” said Valencia, whose company advises some miners in the Philippines.”That’s what we always tell clients.”(LuziAnn Javier/Bloomberg.com)

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