Philex insists paying only the fines not due to force majeur

MANILA, Philippines – Philex Mining Corp. is only willing to pay the fines for the tailings pond leak at its Padcal copper-gold mine in Benguet as long as these are not due to force majeur.

Philex spokesperson Mike Toledo said on Monday, October 1, that they will contest the P1.034 billion fine the Department of Environment and Natural Resources (DENR) attributed to violations of the Mining Act.

“Our position is, we should not be made to pay for things we have not been negligent of [and] of things that were caused by force majeur,” Toledo said.

Toledo reiterated that torrential rain hitting the area in August led to the incident, and that DENR itself acknowledged was not due to negligence by Philex’s staff in Padcal.

The DENR gave Philex up to this week to respond to its September 26 letter informing them of the massive fines computed based on the results of the findings of the its multidisciplinary team.  

The findings showed that the total weight of solids discharged to the Balog River as of September 6 reached 20,689,179.42 metric tons. Under the Mining Act, a penalty of P50 per metric ton of tailings “discharged into areas other than the approved tailings disposal area.”

Toledo said Philex is only willing to pay for the cost of rehabilitation, clean up, and damages to affected families.

Other fines

Aside from Mining Act-related violations, the DENR is expected to release another set of fines.

DENR Secretary Ramon Paje had said they will still determine the penalty for the violation of the Clean Water Act of 2004 and the fine per violation to its Environmental Compliance Certificate (ECC) contract.

Under the Clean Water Act, Philex faces a fine of P50,000 to P200,000 per day from August 1, the day the spillage started, until the pollution in cleared form waterways affected by the spillage.

The Mines and Geosciences Bureau (MGB), which directly oversees the mining industry, said the spillage from the Agno River and Balog Creek is still not cleared.

Under the ECC contract, Philex faces a fine of P50, 000 per provision violated.

Fines still ‘negotiable’

The DENR, however, said that after Philex submits its arguments this week, it will conduct a one-week review before it will render a “final” decision.

However, Philex can still contest this “final” decision if it decides to file a motion for reconsideration at the office of the Environment Secretary.

Philex will then have 15 days to settle the fines. The terms for payment, however, are still negotiable.

What force majeur?

MGB Director Leo Jasareno has shrugged off Philex’s position that the leaks were due to force majeur.  

In an earlier interview with reporters, Jasareno said that under the Mining Act, tailings “should be 100% contained.”  

“Tailings spill is naturally an accident, you will not do it deliberately,” he had said.

Financial impact

The financial impact of the leaks on the mining firm is “substantial,” explained Philex chair Manuel V. Pangilinan in a previous Rappler interview.

The Padcal mine, which is currently Philex’s only operating mine, has been shut since August 1 and expected to stay shut until the end of 2013 or beyond.

It is considering building two new tailings facilities to replace the broken tailings pond no. 3, which is now 20 years old, having been constructed in 1992.

Each facility and its accessory infrastructure will cost over P300 million and will each take between 6 to 12 months to construct.

These will likely cut Philex’s profits this 2012 to between P1.5 billion to P1.7 billion, from the original P4.5 billion forecast. – Rappler.com

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