The threats faced mining in the Phillipines

In late December 2010 a spokesman for the National Democratic Front (NDF), a confederation that encompasses many of the country’s leftist groups – including the Communist Party of the Philippines (CPP) and its New People’s Army (NPA) military wing –warned that it intended to increase the tempo of attacks against mining companies.

The rationale for this threat was that mining companies damaged the environment, disturbed local communities, engaged in unfair labour practices and only benefited a narrow elite.

While the immediate threat appeared directed at mining operations in northeast Mindanao’s Caraga region – comprising the provinces of Agusan del Norte, Agusan del Sur, Surigao del Norte and Surigao del Sur – it is evident miners could also be targeted in most areas of the country where they are active.

Two obvious questions arise from the mining sector’s perspective – are such threats credible and, if so, what impact could they have on present and future operations?

The context of the threats offers some comfort.

The NDF statement coincided with the 42nd anniversary of the start of the present communist insurgency, launched in December 1968.  

The NDF has declared mining as ‘detrimental to the interests of the people’ in both 2007 and 2008, without markedly increasing the tempo of its attacks against mine sites or infrastructure.

The official view of the threat is that it simply represents the annual demand for so-called ‘revolutionary’ or ‘war’ taxes extorted by the CPP/NPA on wide range of business and commercial interests throughout the country. 

While the communists’ prefer the term ‘fines,’ no one disputes that  large sums of money are collected by the CPP/NPA in exchange for permitting companies to operate in areas where their interests can be readily disrupted by force if they fail to comply.

According to the Armed Forces of the Philippines (AFP), the NPA extorted USD2.17 million between January-November 2010 from a wide variety of businesses, almost USD 1 million less than 2009’s USD3.1 million.

Such figures are indicative rather than definitive, however, given their source and because many companies fail to report whether and how much they have paid the communists.  

It also points towards how the insurgency may be assessed as a threat to foreign and local business interests as the data, on both sides, is highly politicised and intended to serve competing agenda.

For example, the AFP announced at the end of 2010 that it had further reduced the strength of the NPA in line with, though failing to meet, targets established at the year’s start.

The importance of such metrics within bureaucracies, particularly in such often random and uncontrolled areas as armed conflict, often overwhelms ‘ground realities’ as it often serves as the only measure of progress or success.

Nevertheless, and in the absence of any other independent or credible information, even such tainted data does serve a purpose if only by illuminating the gap between aspiration and compromise.

This is evident in the latest AFP estimates on NPA strength.

According to the military, the NPA by end-2010 was at an ‘historic low’ of 4,111 members, down from 4,702 at the end of 2009 and against the group’s peak strength of around 25,000 members in the 1980s. 

The AFP claimed to have dismantled three guerrilla fronts in 2010, reducing the fighting fronts of the NPA rebels to 48 from 51.

The final figure is the most revealing as it points to a dramatic reduction in the campaign to close down NPA fronts.

This may reflect internal military and national politics following the mid-year elections and greater emphasis on once again reaching an accord with the communist insurgents.

It may also correspond with the recognition that the remaining fronts are well-entrenched in local communities and will be difficult to dislodge without creating even greater opposition to the national government and its agencies. 

NPA capabilities

The NPA has demonstrated a sustained capability to attack or otherwise disrupt mining operations in key regions of the Philippines, both through the use of force and ‘softer’ options capitalising on peaceful local opposition to projects and their related infrastructure.

However, measuring capability over motive is far more problematical and relies to a great extent on analysis rather than data.

The NPA has shown its ability to mount often sophisticated and multi-objective attacks against mining property and personnel, as well as military and police assets deployed to protect these sites.

While such raids do lead to casualties among mining and security personnel, the relatively low numbers suggest this not a priority, and may even reflect the NPA’s intention to limit damage to material.

This thesis may be tested against recent NPA attacks against military or police targets:

• in mid-December 2010 ten soldiers were killed and two wounded in an NPA ambush in Northern Samar;

• in late August 2010 five soldiers were killed and one wounded when NPA guerrillas attacked a military outpost in Agusan del Sur province in Mindanao’s Caraga region;

• in late August 2010 eight police officers were killed in an NPA ambush in Northern Samar;

• in early July 2010 seven soldiers were killed in an NPA ambush northern Luzon’s Mountain Province.

These attacks demonstrate the NPA’s willingness to, on their own terms, directly confront the security forces. They also imply that the NPA’s motives for targeting mining and other commercial operations represent a calculated policy rather than military opportunism.

Motives

The CCP/NPA motives for targeting mining and other commercial ventures are varied.

The NPA’s main defence against the state is the support it receives from within the communities its cadres operate.

This determines the guerrillas’ tactics, if not strategy, and therefore tends to reflect the concerns of the often remote regions the NPA favours for its bases and operational ‘fronts.’

As many of the communities, notably those comprising tribal groups, oppose industrial development and are highly dependent on the environmental status quo, the NPA has a political motive for emphasising its opposition to mining operations.

However, mining also provides employment opportunities valued by other sections of the community that the CPP/NPA do not wish to alienate, which leads them to also focus on the terms and conditions of employment offered by the mining and ancillary companies.

Further, and to many analysts most importantly, miners and their contractors are potentially lucrative source of income that would vanish if the NPA used excessive or frequent force.

In addition, the threats against mines or other businesses have created a large private security presence. These individuals rarely offer a serious challenge to the NPA, but they do serve as a useful source of firearms, mobile telephones, radios and other equipment needed by the guerrillas.

Finally, the mines and other projects that require state security also serve to disperse the armed forces and police, to the strategic advantage of the NPA.

Troops are often spread thinly and their capacity to concentrate their efforts against the NPA reduced, while their vulnerable supply and communications routes offer attractive and low-risk targets for the guerrillas.

Mining company response

By early 2011 very few foreign and domestic mining companies have been driven off their concessions in the Philippines by threats from the NPA.

According to one source, the exception was a local company in Surigao del Norte in Mindanao’s Caraga region that ended mining operations in the region after its acting resident manager was shot dead by the NPA in mid-2000.

The deliberate murder of the manger was the third NPA attack at the mine, which the communists sought to link to alleged environmental damage caused by the project and the company’s poor treatment of its employees.

The reality is more likely that the company failed to pay the NPA the money it demanded.

However, according to military sources in Caraga, by late December 2010 at least seven mining companies operating the region have complained of extortion attempts by the NPA and have implied they may have to leave the area, a prospect welcomed by at least one prominent Roman Catholic bishop.

Another response has come from Senator Gregorio ‘Gringo’ Honasan, the former army officer who led at least seven coup attempts against the former president Corazon Aquino.

Honasan in early 2011 advocated allowing mining companies to raise and control their own armed militias to deter NPA attacks.

Few foreign companies would be legally permitted by their own national laws to become involved in such a move.

Summary

Allan & Associates do not believe that the CPP/NPA’s most recent threats against mining companies are credible or differ materially from similar threats made in previous years.

As noted, the NPA relies on mining companies as reliable and lucrative sources of revenue, as well as a mechanism for mobilisation among many traditional communities and arsenals for their operational units.

Were local opposition to mining to fade, which it at present it shows no signs of doing, then the CPP/NPA could be expected to switch their attention elsewhere.

A greater risk than the present situation, which at least partly favours the NPA, could evolve if the government and mining companies decided to further ‘militarise’ security by seeking to directly confront the communists through the use of greater force.

Heightened tension and increased conflict would lead to an inevitable increase in civilian casualties, human rights abuses and the potential for corporate reputational harm.

The reality of the predicament facing many mining companies is that quietly paying off the NPA may be the only option open if projects are to go ahead or production maintained.

In strictly economic terms the payments demanded by the communists can be treated as costs like any other expense – with the rising price of fuel probably a far greater burden on operations than extorted ‘taxes’.

Allan & Associates is a Hong Kong based security risk management consultancy that provides security risk management advice to companies involved in extractive industries across the Asia-Pacific region.

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