towards an achievable manpower action plan for the philippine

TOWARDS AN ACHIEVABLE MANPOWER ACTION PLAN FOR
THE PHILIPPINE MINING INDUSTRY
Nelia C. Halcon
Executive Vice President
Chamber of Mines of the Philippines
Profile of the Mining Industry
A Brief History
Spanning more than a hundred years, and even before
the war, the Philippine mining industry was already
composed of about 40 large scale mining projects mostly
operated by the Americans.
Mining was pursued as the industry of the 70s with the
promulgation of PD. No. 463 to fast track the processing of
claims and the development of mining projects. With the
medium and long-term plan anchored on mineral-based
industries such as the 11 major industrial projects, mining
posted a high rate of growth from 1971 to 1981 and with 45
mines operating; their combined output contributed 21% of
the country’s total export earnings in the 1980s.
A number of factors, however, caused the decline of
the industry in later years. From the oil crisis to heavy
taxation compounded by the decline in world market prices,
the industry became saddled with debt burdens that later
made some operations uneconomical leading to mine
closures.
Except for a brief boom in 1988-89, the mining
industry struggled through the 1990s and was given the
necessary boost with the promulgation of the Mining Act of
1995. Subsequent events such as the Marcopper incident,
the constitutional challenge to the Mining Law and the
passage of the IPRA along with the increasing complexities
of issues prevented the industry from moving forward. The
20% export receipts during the boom years went down to
only 2% in 2003 with barely 7 mines operating, down from
the previous 45. The industry’s downtrend was
compounded by the ambivalent policy of the national
government towards mining in previous years. The
emergence of advocacy groups against mining in view of
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issues ranging from foreign investments, environmental
problems, and indigenous peoples concerns, brought to the
fore the many challenges facing the industry.
With the government and private sector efforts to
revitalize mining particularly after the constitutionality of
the Mining Act was upheld by the Supreme Court, a strong
sentiment that mining may well become the driver of
economic growth in the country has made government to
capitalize on its strong opportunities.
Current Developments
Early last year after the Supreme Court ruled with
finality the constitutionality of the Mining Act., the Chamber
of Mines in close coordination with government conducted
an International Mining Investment Conference in February,
the main objective of which was to inform the international
mining community that the industry is “open for business”,
and that mining investors can now invest in a number of
mining projects. Various road shows were also made in
several countries culminating into the 6 th Asia Pacific Mining
Conference in October, 2005 with no less than the President,
tendering a dinner reception for the mining participants.
Before the end of the year, the government recorded
investment inflows of close to US$ 500 million and a job
generation of 5,000. It has targeted a turnover of US 5
billion in 2006 with a corresponding 50,000 jobs and US$6.5
billion over the next five years.
In 2005, the mining industry was able to sustain its
growth momentum with nickel providing the biggest
contribution aside from crude oil. Domestic production of
gold, copper and chromite leaped to a robust growth in
terms of value as prices of major minerals soared in the
world market.
The mining industry is composed of about 2,311 or
more mining enterprises, broken down as follows.
2 large-scale gold mines
- Victoria Gold Project (Lepanto Consolidated
Mining Corporation)
- Teresa Gold Projects (Lepanto Consolidated
Mining Corporation)
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• 1 large-scale copper mine
- Padcal Copper Project (Philex Mining
Corporation);
• 4 medium-scale nickel mines
- Palawan Nickel Project (Rio Tuba Mining
Corporation)
- Cagdianao Nickel Project (Cagdianao Mining
Corporation)
- South Dinagat Nickel Project (Hinatuan Mining
Corporation)
- Taganito Nickel Project ( Taganito Mining
Corporation)
• 4 medium-scale chromite mines
- Masinloc Chromite Project (Benguet
Corporation)
- Omasdang Chromite Project (Crau Minerals)
- Homonhon chhomite Project (Heritage
Resources Mining Corp.)
- Dinagat Chromite Project (Krominco.)
• 4 medium-scale gold mines
- Canatuan Silver-Gold Project (TVI Resources
Philippines, Inc.)
- Acupan SSM Operations (Benguet Corporation)
- Diwalwal Direct State Development Project
(NRMDC)
- Banahaw Gold Project ( Philsaga Mining Corp.)
• 16 cement plants and quarries
• 127 limestone and slaked lime producers
• 93 rock aggregate quarries and crushing
plants
• 184 industrial sand and gravel quarries and
crushing plants
• 9 marble plants and quarries
• 1,871 quarries and small scale mines of
covered by permits issued by local
government.
During the first five months of 2005, trading value in
the Philippine Stock Exchange ballooned by 162% to P196.5
billion from P74.9 billion in 2004. The liquid performance of
the market is attributed to the optimistic macroeconomic
indicators such as GDP growth, rise in private consumption,
increase in exports and the implementation of key fiscal
measures. Towards the end of the year, the mining sector’s
impressive growth became more visible as it cornered
53.6% of total trading volume, retaining its position as the
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est performing sector, followed by the oil sector. Foreign
investors accounted for more than 50% of the market
turnover, an indication of the attention given to economic
fundamentals rather than the political troubles.
These developments validate the Washington D.C.-
based Institute of International Finance ranking the
Philippines’ investor relations program number one in its
assessment of the investor relations activities of 30
emerging economies. In November 2005, the Philippines
also received the Mining Journal Country Award for showing
the most improvement in terms of attractiveness to mineral
investors during 2004-2005.
Barely a year after promoting the 24 priority mining
projects and considering the long lead time of putting a
mine into operations, four (4) of the 24 projects are already
in their production stage, namely: Coral Bay Nickel
Processing, Teresa of Lepanto, TVI Canatuan and Rapu Rapu
of Lafayette.
In all, the Philippine mining industry performed
exceptionally well in 2005 based on its performance in the
stock market, investments, GDP contribution, exports,
employment generation not to mention the multiplier effects
that mining operations bring in the communities hosting the
mine sites.
Outlook for 2006 and Beyond
• The mining industry will continue to enjoy a seller’s
market in 2006 fuelled by the continuing increase in
demand that has been driving prices into all time highs.
• With a third of the entire archipelago considered
geologically prospective areas for metallic minerals, and
with only 1.5% of the total land area covered by
approved mining tenements, the likelihood of new
discoveries can be expected during the year.
• In terms of production, operating companies will take
advantage of high prices to sustain increasing costs of
operations, particularly in fuel and energy.
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• Barring any major political instability, investment in the
industry is expected to rise with the strong economic and
market fundamentals. Industry forecast indicate that
total investment in 2006 may reach US$5 billion with a
corresponding job generation of 50,000, and US$6.5
billion over the next five years.
• Policy reform implementation will continue to be
monitored to ensure the inflow of direct foreign
investments or money via the local bourse.
• 2006 will continue to be dominated by gold, copper,
nickel and chromite although manganese and iron ore
being in demand will resurface into the production
stream.
• The construction sector’s boom will impact on the nonmetallic
minerals and the cement industry. The on-going
construction activities also augur well for the service
industries and the machineries and equipment sector.
• Most indicators give a positive level of optimism for 2006
and policy-makers are on guard in maintaining economic
stability and in sustaining the momentum for growth.
Employment Situation in the Mining Industry
The revival of the mining industry will have a positive
effect on employment. As experienced in the past, increased
exploration activities and the development of new projects as
well as the expansion of existing ones bring about a
corresponding increase in employment. Statistics have
indicated this when employment in 1995 of 107,000 went up
to 130,000 in 1997 due to the upbeat situation in the industry
after the passage of the Mining Act. The 30,000 employees
were wiped out easily in 1999 after most investors left the
country due to the challenge in the mining law, the issues
brought about by the passage of IPRA and the
decentralization of government functions.
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Table 1
Employment in Mining & Quarrying
1995- 2004
________________________________________________
Year
Total Employees
________________________________________________
1995 107,000
1996 113,000
1997 130,000
1998 120,000
1999 100,000
2000 110,000
2001 104,000
2002 101,000
2003 104,000
2004 118,000
2005 125,000*
________________________________________________
*Estimate
Source: DOLE
The percentage share of total employment in the
mining sector is not significant owing to its equipmentintensive
nature. Of the total employment figures released
by DOLE, it could be safely estimated that only about 10 to
20% are from the metallic sector with the rest contributed
by the non-metallic sector including the cement industry.
Although not considered labor intensive, experts in the field
say that for every job generated in the industry, a
corresponding 5 jobs are created in the upstream and
downstream activities in the sector.
Statistics on deployment by mining engineers,
geologists and other mining-related profession are hard to
get. What is known is that a number of the technical people
employed previously by the mining companies during its
heydays have found better paying jobs in as far as South
Africa, Canada, the United States and South America.
Recently, some well-trained technical personnel have been
taken by new mines operating in the neighboring countries
of Indonesia, Malaysia and Vietnam.
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With respect to the terms and conditions of
employment, mining engineers, geologists, metallurgists
and other related profession employed in the mining
industry receive higher compensation in view of the nature
of their jobs. In addition, most if not all receive non-cash
benefits such as housing, electricity and water, with some
giving their employees stock options.
Demand for Manpower Resources in Mining
The nature of work in the mining industry requires
competence in engineering jobs and skills in terms of the
requirements of the mining operations. Those who have
gained on the job experience are normally preferred than
those who have not been immersed in actual mining
operations. At present, however, new graduates can be
hired immediately after passing the Board examinations and
are given training by the companies. Age is not too
important although physical fitness counts. Gender does not
pose problems although most mining companies prefer
males over females in view of the nature of the job.
The demand for manpower in the mining industry can
be gauged by the number of active exploration activities
being undertaken all over the country, the expansion in
operations by existing companies, the planned operation of
new enterprises as well as the re-operation of companies
that have closed shop in the early 1990s. In the nonmetallic
sector, we normally consider the trend in the
construction industry as an indicator.
Some of the major producing companies are alarmed
by the resignation of their trained employees who have
accepted new jobs either abroad or in new companies that
are now operating in the country. In my several years of
work at the Chamber of Mines, it was only last year, when I
received several letters from our associates in the ASEAN
Federation of Mining Association asking me to recommend
geologists, mining engineers and other related mining jobs
for employment in their countries or in projects they are
doing elsewhere. Indeed, it can be said that mining is really
back and that mining jobs are currently in demand that
some mining companies are now even posting their job
requirements in universities offering mining-related courses,
and are willing to train new graduates.
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Job Prospects in the Next 5 Years
Barring any political instability or putting politics aside,
our industry officials have confidently forecast that for 2006,
investments may reach US$5 billion with a corresponding
job generation of 50,000 and US$6.5 billion over the next 5
years or a job generation of 75,000 more.
Government forecast, on the other hand, based on
projected investments from new and expansion projects and
considering the 24 priority projects indicated an increasing
trend as shown in the table 2
Table 2
Job Generation Projections From the Priority Mining
Projects*
________________________________________________
Year
Projected Jobs
2004 2,716
2005 3,370
2006 5,034
2007 8,020
2008 9,450
2009 8,050
2010 6,900
* Metallic Mines only
Source: Mines and Geo-sciences Bureau/DENR
A snap shot survey conducted among the members of
the Chamber of Mines indicated that demand for mining jobs
will increase between the period from 2006 to 2009 when
some of the large ticket projects would have started, up to
2010, tapering off after that year. A lot of requirements will
be coming from the production, seasonal and contractual
workers, those that need special skills in mining. This will
pose a serious problem in the industry considering that
these workers need to be trained before they are immersed
in actual mining.
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The Supply Side
The Professional Regulations Commission (PRC) should
have a complete data on the stock of professional mining
engineers, geologists and related professions based on the
number of professionals passing the board examinations.
In late 1990s when the industry was almost considered
a sunset industry, several institutions decided not to offer
mining courses. These include St. Louis University in
Baguio, Mapua University and Cebu Institute of Technology.
The number of graduates from universities offering miningrelated
courses does not reflect the optimism in the
industry. This is understandable considering that it was
only recently when the mining industry was given a
predominant place in government’s programs.
Table 3
No. of Graduates in Mining Related Professions
________________________________________________
Year/Course UP Adamson Mapua Total
2000 /Geo 25 1 6 32
Mng 2 0 8 10
Met 58 58
2001 Geo 19 1 3 23
Mng 2 0 8 10
Met 58 58
2002 Geo 18 2 7 27
Mng 7 0 7 14
Met 48 48
2003 Geo 27 2 4 33
Mng 5 2 4 11
Met 30 30
2004 Geo 16 2 4 22
Mng 4 2 1 7
Met 29 29
2005 Geo 29 2 8 39
Mng 16 0 0 16
Met 37 37
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Total Graduates Per Year of Mining Related Profession
Year Geologists Mining Eng. Met. Eng.
2000 32 10 58
2001 23 10 58
2002 27 14 48
2003 33 11 30
2004 22 7 28
2005 39 16 37
________________________________________________
Statistics show that the mining profession has lost its
luster as a career based on the number of graduates
produced during the last five years. We do not have to
blame the institutions or the private mining sector about
this outcome because there exist reasonable reasons why
the young generations did not consider mining as a career or
profession. First, the environment for mining as an industry
was performing dismally since 1997 and it was only after
seven years when government started promoting its
development and revitalization. A strong public opinion
against mining has been relentlessly pursued by advocates
against mining and this had an impact on young minds.
Lastly, some academic institutions joined the fray against
mining such as Meriam University.
Projections for the Next 5 Years
It is hard to project the number of graduates in
mining-related professions over the next 5 years, this being
a function of demand (from the private mining industry and
government) and the ability of educational institutions to
promote mining as a career. It maybe safe to assume that
with an increasing demand, the profession may entice a
number of young people, particularly those within the
miming industry circle.
Profile of Universities and Training Institutions
In Manila, there are now only three (3) universities
providing mining and related courses - UP, Adamson and
Mapua Institute of Technology although Mapua has stopped
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offering the mining engineering course. Mapua, however,
has developed engineering courses related to energy
development and management. Most of the teaching
personnel come from the Mines and Geo-sciences Bureau
although a good number cames from private mining
companies.
ISSUES AND CONCERNS
When the Mid-Term Philippine Development Plan was
crafted, it has identified the mining sector as an industry
that would require a large number of workers equipped with
specific knowledge and skills. With the efforts of
government to revitalize the mining industry as one of the
key drivers of economic growth, the demand not only for
professionals but more so for production workers will
increase within the next 2-3 years. This is one important
concern that should be addressed immediately.
Next issue is are we prepared to meet the demands for
mining professionals locally? Already, there are tensions
with respect to local companies due to pirating of trained
professionals by new companies that offer high salaries and
tempting benefits. While this work to the advantage of our
trained professionals, it may cause hardships to companies
that are only starting. Relationships within the industry
maybe affected, to the detriment of the entire industry.
What about our academic and training institutions?
Are they ready to meet the demand for mining professions in
the near term? Are there ready stock of teaching personnel
as well as facilities?
One of the major concerns that should be addressed by
government, especially the DOLE is the absence of labor
statistics in the industry. It is frustrating to do a think
paper when you cannot get the number of professional
mining engineers particularly those who are active or have
gone abroad. This is also true with the geological
profession. At most, you have to rely on the professional
organizations.
The proliferation of contractual and seasonal
employment should be looked into also by the DOLE.
Contractual and seasonal employees who normally
constitute a bigger portion of company employees are
sometimes not entitled to company benefits.
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INSIGHTS AND RECOMMENDATIONS
The Labor Code passed sometime after the 1986 People
Power Revolution may have given dignity to our labor force,
but there have also been a number of implications that have
been detrimental to business.
At a time when business were not doing well, some or
most companies resorted to outsourcing to reduce the
number of regular employees and to cut costs. Whether this
system is advantageous to the workers or not have to be
confirmed from our labor leaders. Companies should also be
able to give indicators on whether such a system increases
labor productivity.
In mining, labor unions are prevalent such that mine
labor is assured of fair play thru a collective bargaining
agreement.
The signs of the times point to an accepted norm that
labor should be considered the greatest resource of an
enterprise. It is incumbent upon the employers to inform
their employees of current issues that affect industry as well
as being transparent about the condition of the company.
Labor, on the other hand, should consider their source of
employment their own because they derive their living from
the company. They should also be able to understand their
employers when the going gets tough.
……. 00 ……..
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