Philex mine leak impact 'severe and substantial'

MANILA, Philippines – Manuel Pangilinan, chairman and chief executive of Philex Mining Corp., the Philippines’ largest gold mine, said its flagship Padcal mine site is set to remain shut until the end of 2012 due to waste leaks, and the closure would likely wipe over P2.5 billion off its profits.

The leak of tailings — rubble and other mining waste — from Padcal’s tailings pond near the northern resort city of Baguio began on August 1 and took the company more than a month to plug.

In his one-on-one #TalkThursday interview with Rappler CEO Maria Ressa aired on Thursday, September 20 at the 2012 Mining Conference in Manila, Pangilinan said the mine would probably be “shut down until the end of the year”.

“We don’t want to take risks,” he said in the September 17 interview.

The financial impact would be “severe and substantial,” he said. “[We] had forecasted profits for this year of about P4 billion its likely to drop to something between P1.5 to P1.7 billion. It’s a significant decrease.”

Watch the interview below.

Pangilinan also noted that its estimate of the leak’s financial impact still does not include the fines that the Mines and Geosciences Bureau (MGB) are bound to slap on Philex for the leak.

The Department of Environment and Natural Resources (DENR) had initially assessed the fines to reach P325 million for violations of the Mining Act and Clean Water Act. Environment Secretary Ramon Paje had said this amount could “double, even triple.”

Investigations by government agencies, as well as by a Philex-commissioned group, are still ongoing.

Philex senior vice president for corporate affairs Mike Toledo told reporters on the sidelines of the mining conference that the leaks have been stopped but could not give a timetable for the completion of the clean-up.

No operations

Pangilinan said that, definitely, the Padcal mine will not operate for the rest of the year.

This is because the pond, which leaked the waste, would be condemned and a new one built to prevent a repetition of the spill, which was caused by severe rains unleashed by Typhoon Saola.

“It is likely we will condemn the pond. We don’t want to take a risk of continuing the use of the pond. We are now in the process of looking for a new location of a new pond to build a pond or ponds,” he said.

Padcal’s “pond no. 3” is the mine’s third and only operating tailings facility after the previous two were decommissioned and rehabilitated. Philex has been operating the Padcal Mine since 1958.

The leak spilled mine waste into a creek that flowed down to the Agno, one of the country’s largest rivers. He stressed that the discharge was non-toxic.

Bad timing

The mine tailings was confined within the Philex mine site but it created ripples throughout the mining industry. The incident was cited by some anti-mining advocates as one of or may be the worst mine leak to ever occur in the Philippines.

As the Aquino government pursues a mining policy to address environmental and other concerns raised by interest groups against mining in the country, Pangilinan said the Padcal mine leak did not help further the cause of the industry.

Pangilinan said the leak came a bad time when the industry was dealing with so much controversey.

“Yes, unfortunately, it comes at the wrong time. But you know, that’s how problems arise. It comes at the most unfortunate time, you don’t have control over when your problems could arise,” Pangilinan said.

“It’s something we didn’t forsee and we’re not happy about it. We just have to manage our affairs better than we have,” he added.

He said they followed the rules, were transparent, and made timely disclosure to the government, the communities, and their shareholders.

At the Mining Conference, the industry leaders and Pangilinan’s peers share that they admire Philex and how it handled the crisis.

For a blow-by-blow account of the discussions and issues raised at the 2012 Mining conference, click here and here. – Rappler.com

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How does mining affect you? Are you pro or against mining? Engage, discuss & take a stand! Visit Rappler’s #WhyMining microsite for the latest stories on issues affecting the mining sector. Join the conversation by emailing whymining@rappler.com your views on the issue.

For other views on mining, read:

Yes to Mining	No to Mining
Correcting lies and disinformation by Gerard H. Brimo	Stand for the environment by Regina Lopez
How can mining work for Philippines? by Manuel V. Pangilinan	Mining is a social justice issue by Christain Monsod

More on #WhyMining:

Philex mine leak impact ‘severe and substantial’ – MVP

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