[Editor’s Note: This article was originally published as part of “The Big Dig: Mining Rush Rakes up Tons of Conflict,” a Newsbreak special issue on the mining industry, published in 2008]

Like Gaul, which was divided into three parts, the government’s latest attempt to enforce its authority over Diwalwal near the border of Surigao del Sur and Davao del Norte calls for splitting the country’s most famous gold-rush site into three segments.

And like the ancient Romans who failed to subdue the hardy tribes of Gaul, the government has been trying without success to regulate the thousands of small-scale miners who, since the 1980s, had been digging for gold on Mt. Diwata using crude and environmentally harmful mining methods.

Early this year, the government owned Philippine Mining Development Corp. (PMDC), which has nominal authority over the 8,100 hectares that make up the Diwalwal mineral reservation area, unveiled a new plan for developing and sharing the mineral wealth that lies beneath Mt. Diwata.

The idea, according to PMDC president Oliver Butalid, is to divide the entire area into three zones, one for each of the powerful but often feuding groups that are laying claim to Mt Diwata’s mineral riches. The first zone, called the Diwalwal Integrated Development Area, covers the original 729 hectare gold-rush site on Mt. Diwata. It contains the highly mineralized Balite Vein and will be developed by the PMDC in close cooperation with the small-scale miners and mining companies already active in the area.

The second zone, the Mining Investment Areas, covers parts of the reservation that are generally unpopulated but believed to be highly mineralized. Rights to mine the investment areas—which include Upper Ulip, Paraiso, Buenas Tinago, Agtuuganon, Letter V, and Higanteng Bato—will be awarded through competitive tender to large-scale mining companies.

The third zone, the Tribal Mining Area, will be controlled by the tribal communities with ancestral domain claims over portions of Diwalwal such the Manobos, Mandayas, Babawans and Manguangans. Tribal leaders are reportedly in talks with mining companies that will help them develop the mines.

Social Accord

At the heart of the proposal, which the PMDC has been referring to as a new “social accord,” is a partnership between the state company and small-scale miners in an ore-sharing scheme that was first tried in the Akupan mines of Benguet province.

According to the plan, government will oversee the design, construction and management of the tunnel system in the first zone, the Diwalwal Integrated Development Area. PMDC even promised to provide training to upgrade the small-scale miners’ skills. But portions of the system will be auctioned off to existing mining groups, including the mining cooperatives and the so-called “Big Three.”

Presented to the locals early this year, the plan was favorably received by mining groups and the tribal communities.

Franco Tito, village chief of Barangay Mt. Diwata and a small-scale miner himself, told Newsbreak that the small-scale miners of Diwalwal accepted the proposal because the ore-sharing system gives people hope of making it big someday. The plan also secures their place in the mines.

If the new “social accord” works, Diwalwal can be the big turnaround story, the country’s mining show case, Butalid says.

Failed Attempts

The government’s latest plan for Diwalwal represents its best chance yet for imposing order in what is often called the Philippines’ own version of the “Wild West” since 2003 when President Arroyo ordered the Department of Environment and Natural Resources (DENR) to take over the gold-rush site after almost two decades of unregulated mining frenzy.

The year before that, on Nov. 25, 2002, the president signed Proclamation 297 establishing the Diwalwal Mineral Reservation which set aside 8,100 hectares out of the Davao-Agusan-Surigao forest reservation.

Social services were introduced. The army was brought in to regulate the entry of explosives and other environmentally hazardous substances used in the mines. Government tried to win the miners over to their side.

But re-establishing government authority in an area long used to its absence was easier said than done. Locals have little or no trust in government entities and every official initiative is suspect.

Natural Resources Mining Development Corp. (NRMDC), the precursor of the PMDC, initially thought about selling shares to the public to raise money to develop Diwalwal. But the idea proved unworkable because only companies that have a track record of profits can launch initial public offerings.

The government then thought of auctioning mining rights to portions of the entire reservation to local and international investors. Among those that expressed interest, according to an Oct. 6, 2006 press release of the DENR Public Affairs Office, were Chinese investors behind ZTE International, RT Mineral Resources Inc., CITIC-UAAP Investment Corp., and South African investor Harmony Gold Mines.

But the bidding, set for March 2007, did not push through. The reason, as always, was social unrest. The small-scale miners, fearing that new investors would threaten their continued stay in the area, began mobilizing to block the bidding process.

The ore body that the small-scale miners have been working on for the past 20 years is nearly exhausted, and they wanted their future source of income assured.

Proclamation 297 allowed the small-scale miners to continue mining the area that is 600 meters above sea level within the 729-hectare Minahang Bayan or “people’s mining” zone. But the ore bodies below that were assigned exclusively to the NRMDC. The miners wanted “a piece of the action” in the development of this part of the mines, Butalid explains.

Neither did the small-scale miners accept offers of possible jobs in NRMDC. “It’s a dead end,” says barangay chairman Tito. “What we want is ore sharing.”

An ore-sharing scheme, Tito explains, gives an ordinary miner a good chance to escape a life of poverty and hardship. “If he is lucky, he could hit high grade,” he says.

By finally giving in to the small-scale miners and tribal communities’ demands for ore sharing, the government has finally won a chance to impose order in Diwalwal and possibly end decades of dangerous and environmentally unsound mining practices.

Old Disputes, Fresh Controversies

But old disputes over mining rights in Mt. Diwata and fresh controversial deals with Chinese state firms threaten to undermine the government’s new “social accord” with the small-scale miners and tribal communities of Diwalwal.

In April 2008, Southeast Mindanao Gold Mining Corp. (SMGMC), which is pressing a decades-old mining claim over hundreds of hectares in Mt. Diwata, filed a petition urging the Supreme Court to review a June 2006 decision that upheld the government’s right to take full control over Diwalwal. The high court also ruled that SMGMC’s mining rights were void because they were based on mining claims that had lapsed.

The petition, if granted by the high court, could rip apart the government’s new “social accord” with small-scale miners and tribal communities of Diwalwal which is legally based on the government taking full control over the gold-rush area.

But even as SMGMC’s petition has yet to be considered by the Supreme Court, it is already beginning to create intrigues and sow discord between the government and other stakeholders of Diwalwal.

In its petition, SMGMC alleged that the government has entered into a memorandum of understanding granting mining rights over parts of Diwalwal to ZTE International, an affiliate of the Chinese firm that figured in the US$329-million national broadband network project that was tainted by alleged bribery of top officials, including former Economic Planning Secretary Romulo Neri.

The PMDC denies any formal deal with ZTE. The memorandum of understanding, according to a PMDC official, was simply an “agreement to explore the possibility.”

Had it been made final, he says, the company would not have contemplated bidding out the project anymore. “Why would we go on public bidding if there was already an agreement?” a ranking official of the company told Newsbreak.

The MOU actually covered a package of investments that ZTE International entered into with the Philippine government. It was signed by Department of Trade and Industry Secretary Peter Favila. “We do not even have an official copy of the MOU,” the PMDC official says.

Still, shortly after the deal with ZTE became public, local officials in Diwalwal and Compostela Valley province began warning anew of renewed conflict and questioned the government’s sincerity in dealings with small-scale miners and tribal communities.

Tito, according to the Sun Star Davao newspaper, warned: “They should refrain from interfering with Diwalwal to avoid conflict. I’m sure there will be bloodshed if a mining firm were allowed to mine there.”

The governor of Compostela Valley, while refusing to criticize PMDC without more information about the exact nature of the deal with ZTE, nonetheless urged the state company to be “transparent with the provincial government on [its] plans in Diwalwal,” according to the Davao newspaper.

Full disclosure on the memorandum of understanding with ZTE International is the least the government can promise to regain the Diwalwal stakeholders’ trust and confidence. But it also seems the hardest thing for the Arroyo administration to do, judging by its efforts to keep Neri from being questioned by the Senate on the
President’s role in approving the broadband deal with ZTE.

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