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The Philex Mining Corporation Experience

WALTER W. BROWN, Ph.D.Chairman and Chief Executive Officer

Philex Mining Corporation

ImplementingCORPORATE SOCIAL

RESPONSIBILITYPolicies & Practices

ImplementingCORPORATE SOCIAL CORPORATE SOCIAL

RESPONSIBILITYRESPONSIBILITYPolicies & Practices

PERCEPTIONS ON MININGPERCEPTIONS ON MINING

Socially and Culturally Insensitive

Environmentally Destructive

Greedy Business Giants

MINING INDUSTRYMINING INDUSTRY

Uncertainty

Resistance

Fear

Mistrust

COMMUNITY COMMUNITY COMMUNITY

COMPANIESCOMPANIES viewed as“OBLIGATED PROVIDERS”

Instead ofInstead ofPARTNERS FOR DEVELOPMENTPARTNERS FOR DEVELOPMENT

NATIONAL DEVELOPMENTNATIONAL DEVELOPMENTNATIONAL DEVELOPMENT

COMMUNITYDEVELOPMENTCOMMUNITYCOMMUNITY

DEVELOPMENTDEVELOPMENT• Local Empowerment• Economic Upliftment / Self-

reliance• Improvement of Basic Social

Services

ENVIRONMENTALRESPONSIBILITYENVIRONMENTALENVIRONMENTALRESPONSIBILITYRESPONSIBILITY

• Sound Environmental Management

• Environmental Conservation / Wise Utilization of Natural Resources

• Progressive Rehabilitation

Environmental, Social & Economic Progress of Partner Communities

Environmental, Social & Economic Progress of Environmental, Social & Economic Progress of Partner CommunitiesPartner Communities

• Designed to act as a medium and help facilitate a more appropriate “fit” of environmental conservation & community development.

• Promote and maintain the company’s license to operate by building goodwill, trust & support from the communities

• Partnership Building

Mission Statement:Mission Statement:“…to continue to be socially responsible by supporting the communities where we operate while conserving and enhancing the environment...”

Philex Mining Corporation’sEnvironment & Community Development

Program (ECDP)

Philex Mining Corporation’sEnvironment & Community Development

Program (ECDP)CORE STRATEGY for ENVIRONMENT AND COMMUNITY DEVELOPMENT

CORE STRATEGY for ENVIRONMENT CORE STRATEGY for ENVIRONMENT AND COMMUNITY DEVELOPMENTAND COMMUNITY DEVELOPMENT

Integrate SocioIntegrate Socio--EconomicEconomicInterventionsInterventions

Build willful PartnershipBuild willful Partnershipwith Host Communitieswith Host Communities

Wise Utilization of Wise Utilization of CommunityCommunity ’’s Resourcess Resources

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Improvement of the Quality of LifeHelp make them Self-sufficient Members of the

Community

... Designing Development Programs to achieve Community & Business needs

BUILDING & ESTABLISHING PARTNERSHIPS WITH COMMUNITIES• Provision of Managerial & Financial

Training / Assistance• Income Generating Projects

Formation of New People’s Organizations

Philex Mining Corporation

Local Government Units

Coordination & Strengthening

of Existing People’s

Organizations

COMMUNITYCOMMUNITY--BASED BASED RESOURCE MANAGEMENTRESOURCE MANAGEMENT

COMMUNITY COMMUNITY ORGANIZING PHASEORGANIZING PHASE

ENVIRONMENT andCOMMUNITY DEVELOPMENT

PROGRAM

ENVIRONMENT andCOMMUNITY DEVELOPMENT

PROGRAM

First Phase Second Phase

ACTIVE & ACTIVE & MEANINGFUL MEANINGFUL

PARTICIPATIONPARTICIPATION

•• Collective EffortCollective Effort•• Consultation and Consultation and

Participative PlanningParticipative Planning

ORGANIZATIONAL ORGANIZATIONAL DEVELOPMENT DEVELOPMENT

•• Raising of Critical Raising of Critical AwarenessAwareness

•• Community Community EmpowermentEmpowerment

SELFSELF --RELIANCERELIANCE

•• SelfSelf--ManagementManagement•• Financial ResponsibilityFinancial Responsibility•• AccountabilityAccountability

ENVIRONMENT and COMMUNITY DEVELOPMENT PROGRAM

ENVIRONMENT and COMMUNITY ENVIRONMENT and COMMUNITY DEVELOPMENT PROGRAMDEVELOPMENT PROGRAM

COMMUNITY ORGANIZING PHASECOMMUNITY ORGANIZING PHASE

IMPROVEMENT IMPROVEMENT OF BASIC SOCIAL OF BASIC SOCIAL

SERVICESSERVICES•• HealthHealth•• EducationEducation•• Water SystemWater System•• Etc.Etc.

ECONOMIC ECONOMIC EVOLVEMENT EVOLVEMENT

•• Income Income Generating Generating ProjectsProjects

•• Skills Training and Skills Training and TransferTransfer

•• EntrepreneurshipEntrepreneurship

ENVIRONMENTAL ENVIRONMENTAL CONSERVATION & CONSERVATION & REHABILITATIONREHABILITATION

•• Terrestrial Terrestrial EcosystemEcosystem

•• Aquatic EcosystemAquatic Ecosystem•• Social SystemsSocial Systems

ENVIRONMENT and COMMUNITY DEVELOPMENT PROGRAM

ENVIRONMENT and COMMUNITY ENVIRONMENT and COMMUNITY DEVELOPMENT PROGRAMDEVELOPMENT PROGRAM

COMMUNITYCOMMUNITY--BASED RESOURCE BASED RESOURCE MANAGEMENTMANAGEMENT

INCORPORATEDINCORPORATED

19551955PUBLICLY OWNED CORPORATIONPUBLICLY OWNED CORPORATION

Philippine Stock Exchange listedPhilippine Stock Exchange listed

OVER OVER 50,00050,000INDIVIDUALS AND INSTITUTIONSINDIVIDUALS AND INSTITUTIONS

CURRENT OWNERSCURRENT OWNERS

ECONOMIC CONTRIBUTION

ECONOMIC CONTRIBUTION

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Indirect Taxes

Direct Taxes

P190.1 MP190.1 M

P58.3 MP58.3 M

TOTAL TAXES PAID (from 1956 to 2006) P 9.45 BILLION

TOTAL: P 248.4 MILLIONTOTAL:TOTAL: P 248.4 MILLIONP 248.4 MILLION

2006 DIRECT and INDIRECT TAXES2006 DIRECT and INDIRECT TAXES

P 128.1 M

P 17.1 M(20%)

P 29.9 M(35%)

P 38.4 M(45%)

National Provincial Municipal Barangay

Excise Tax Paid for 2007 = P 213.5 MExcise Tax Paid for 2007 = Excise Tax Paid for 2007 = P 213.5 MP 213.5 M

60 %National Gov’t

60 %National Gov’t 40 % LGUs40 % LGUs

Brgy. Camp 3 and Brgy. Ampucao

2007 EXCISE TAX ALLOCATION2007 EXCISE TAX ALLOCATION

Excise Tax paid (1991-2007): P 1.08 BExcise Tax paid (1991-2007): P 1.08 B

56,918,832.6527,903,009.38 29,015,823.27 Total (Pesos)

8,349,315.02 4,463,812.52 3,885,502.50 2006

7,726,119.38 3,463,283.79 4,262,835.59 2005

9,129,446.58 5,652,974.63 3,476,471.95 2004

8,723,431.93 3,839,923.93 4,883,508.00 2003

7,826,590.79 4,349,086.90 3,477,503.89 2002

6,852,252.37 3,485,535.28 3,366,717.09 2001

8,311,676.58 2,648,392.33 5,663,284.25 2000

ACTUAL COLLECTION OTHER BARANGAYS CAMP 3 YEAR

TUBA REALTY TAX COLLECTION2000-2006

Camp 351%

Other Barangays

49%

5/27/2008

0

50

100150

200

250

300

350

400

1/1/2008

PHILEXC.A.R.

P394.00 P394.00

P245.00

0

50

100

150

200

250

300

350

400

1/1/2008

PHILEX

N.C.R.

P394.00P394.00

P325.00 P325.00

61% higher thanC.A.R. wage rate

21% higher thanN.C.R. wage rate

2,145 Full Time Employees and 482 under contractors2,145 Full Time Employees and 482 under contractors

PHILEX MINE WORKFORCEPHILEX MINE WORKFORCE

PADCAL MINE COMMUNITY……home to 14,000 people of diverse ethnic & cultural home to 14,000 people of diverse ethnic & cultural

background with free basic amenities such as:background with free basic amenities such as:HousingHousing ElectricityElectricity WaterWaterEducationEducation Health CareHealth Care Places of WorshipPlaces of WorshipRecreationRecreation TransportationTransportation TelecommunicationTelecommunication

PHILEX MINING CORPORATIONPHILEX MINING CORPORATION

SOCIAL DEVELOPMENT and MANAGEMENT PROGRAM

(SDMP)

SOCIAL DEVELOPMENT and MANAGEMENT PROGRAM

(SDMP)

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...Philex is pro-active in the field of Corporate Social Responsibility...Philex is pro-active in the field of Corporate Social Responsibility

•• Dynamic and Responsive Community Dynamic and Responsive Community Development Program evolving for 50 yearsDevelopment Program evolving for 50 years

•• Social Development Program is anchored on Social Development Program is anchored on Community Partnership BuildingCommunity Partnership Building

•• Participatory ApproachParticipatory Approach

• Active and Meaningful Participation• Sharing of Resources, Capabilities, and

Responsibilities

Social Development and Management Program (SDMP) as mandated by the Philippine Mining Act of 1995

Social Development and Management Social Development and Management Program (SDMP) as mandated by the Program (SDMP) as mandated by the Philippine Mining Act of 1995Philippine Mining Act of 1995

“...90% of 1% of direct mining and milling costs to develop the host communities and make them self reliant even when the mine ceases operations…”

Health Care Health Care

EducationEducation

Livelihood / Employment Livelihood / Employment

Public Infrastructure & othersPublic Infrastructure & others

Medical & Dental ServicesMedical & Dental Services

Annual operating cost = P 20 MAnnual operating cost = P 20 M

Health Care Programs & Medical MissionsHealth Care Programs & Medical Missions

Botika ng MasaBotika ng Masa

Year No. of Patients2006 3,8642005 3,7202004 1,5552003 2,212 2002 1,996

Year No. of Patients2006 3,8642005 3,7202004 1,5552003 2,212 2002 1,996

75% Subsidized High 75% Subsidized High School EducationSchool Education

……6,993 graduates 6,993 graduates

P 9M annual operating P 9M annual operating costcost

Free Elementary Free Elementary EducationEducation

P 14M annual operating P 14M annual operating costcost

……12,548 graduates12,548 graduates

Livelihood Programs & AssociationsLivelihood Programs & Associations

Company assistance in terms of:ORGANIZATION

FUND SOURCINGTECHNICAL AND

MANAGEMENT TRAINING

Company assistance in terms of:ORGANIZATION

FUND SOURCINGTECHNICAL AND

MANAGEMENT TRAINING

Philex Community Credit CooperativePhilex Community Credit Cooperative HogHog--raisingraising

Loom WeavingLoom Weaving TailoringTailoring

Hanging bridges & Concrete pathways

Philex-Kias Provincial Road

Farm-to- Market roads

Schools ImprovementCooperative buildings

Infrastructure Development ProjectsInfrastructure Development Projects

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Irrigation and Water System ImprovementIrrigation and Water System Improvement

“Irrigation system for vegetableand fruit farmers… and Water system for the

Community

“Irrigation system for vegetableand fruit farmers… and Water system for the

Community

SDMP SummarySDMP Summary 20022002--20062006

55,362,87113,386,35812,829,58112,902,4298,434,2697,867,050Total

38,381,6178,587,0418,386,231 9,836,137 5,779,4045,792,804

Public Infra

5,435,5321,613,751 1,421,296857,538 1,005,618537,329Livelihood

9,483,7832,766,2032,580,2041,635,0821,268,616 1,233,677 Education

2,049,344419,364451,850403,464380,628394,039Health

Total(Pesos)

2006(Pesos)

2005(Pesos)

2004(Pesos)

2003 (Pesos)

2002(Pesos)

Public Infrastructure = P 38.4 M

Health = P 2 M

Education = P 9.5 M

Livelihood = P 5.4 M

ENVIRONMENTAL MANAGEMENT PROGRAM

ENVIRONMENTAL MANAGEMENT PROGRAM

...Philex is pro-active in the field of environmental protection...Philex is pro-active in the field of environmental protection

• The first tailings pond was constructed in 1967

• Community Based Reforestation was also started in the ‘60s as livelihood project

• ISO 14001 Certified even before DENR Adm. Order 14, Series 2003 (Self regulation toward Improved Environmental Performance)

• Materials Recovery Facility was put up in 1998 even before RA 9003 (Ecological Solid Waste Management Act of 2001)

ISO 14001 CertifiedEnvironmental Management System

ISO 14001 CertifiedISO 14001 CertifiedEnvironmental Management SystemEnvironmental Management System

Certificate No.: CI/1097 Issued on September 10, 2002Certificate No.: CI/1097 Issued on September 10, 2002

The first metal mining The first metal mining company in the Philippines company in the Philippines with ISO 14001 Certificationwith ISO 14001 Certification

Water Quality ManagementWater Quality Management

Sedimentation Control

Tailings Pond 1Tailings Pond 1Tailings Pond 1 Tailings Pond 2Tailings Pond 2Tailings Pond 2

Dam Stability Monitoring

Water Quality Monitoring

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Tailing Impounding System & Stability MonitoringTailing Impounding System & Stability MonitoringTailing Impounding System & Stability Monitoring

Tailings Pond 3Constructed in 1983...Tailings Pond 3Constructed in 1983...

Cost: P376 MCost: P376 M

…Operational in 1992…Operational in 1992 Impounding Capacity:142.6 million DMT

Impounding Capacity:142.6 million DMT

……beforebefore

19981998

20002000

Today

19991999

Rehabilitation of Tailings Pond 1Rehabilitation of Tailings Pond 1Rehabilitation of Tailings Pond 1

Bamboo Research Plantation

Mini-Golf course

Grazing area

Rehabilitation of Tailings Pond 2Rehabilitation of Tailings Pond 2Rehabilitation of Tailings Pond 2

Tailings Pond 2 as Community Controlled Dumpsite

…Tailing Ponds are continuouslymonitored...

Tailing Ponds Stability MonitoringTailing Ponds Stability MonitoringTailing Ponds Stability Monitoring

…and Multi-Partite Monitoring Team of MRF Committee

…by In-house…

…and external Consultants

Slope Stabilization & Erosion ControlSlope Stabilization & Erosion Control

Vegetative Measures:- Bench brush layering- Vegetative Mattings- Wattlings- Planting of trees along the slopes

Engineered Measures:- Construction of silt traps and silt ponds- Shotcreting along roads- Construction of retaining walls- Riprapping

Vengineering – a combination of vegetative and engineering measures used for erosion control and slope stabilization.

Reforestation / Watershed ManagementReforestation / Watershed Management

Plantation Established:Ø 1,700 hectares Ø 6 Million trees Ø 90% survival rate

Average Cost : P 4 Million per yearAverage Cost : P 4 Million per year

Community Based Reforestation was also started in the ‘60s as livelihood project (even before The Man and Biosphere Program)

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Air Quality & Noise ManagementAir Quality & Noise Management

Used Oil & Fuel ManagementUsed Oil & Fuel ManagementChemical & Hazardous Materials ManagementChemical & Hazardous Materials Management

Scrubber System at Assay Lab

Scrubber System at Assay LabUsed Oil ContainmentUsed Oil ContainmentOil - Water SeparatorOil - Water Separator

Chemical Storage AreasChemical Storage Areas

Air Quality Monitoring -Mill Area

Air Quality Monitoring -Mill Area

Solid Waste ManagementSolid Waste Management

Environmental Expenses(Pesos)

Mine and Milling Cost

(Pesos)

Percentage ( % )

2007 104 M 2.75 B 4%

1967 –2007

2.3 B 39.6 B 6%

Average Environmental Expenses:

P 108M / year (2000-2007)

Average Environmental Average Environmental Expenses:Expenses:

P 108M / yearP 108M / year ((2000-2007))

Total Environmental ExpensesTotal Environmental Expenses

The 1995 Mining Act (RA 7942) requires at least 3 to 5 percent of the mining and milling cost to be used for Environmental Expenses

MAJOR AWARDS / CITATIONSMAJOR AWARDS / CITATIONS

CHAMPIONAdopt-a-Mountain, Adopt-a-Mining Forest

Program of DENR-MGB

Most Outstanding Firms with Family Welfare Programs

1994: Hall of Fame(1992, 1993 & 1994)1998 as winner again

Citation from DOLE

1998 Platinum Award Environmental Protection and

Community Relations

Citation from DENR & PMSEA

1991, 1994, 2000-2002, 2004 and 2007

Brgy. Camp 3: 1995 UN Awardee1998 Model Barangay in CAR

Philex : The Child Friendly FirmYear 2000: 2-Star; Year 2001:3 –Star

EMPLOYERS CONFEDERATION OF THE PHILIPPINES (ECOP)

Adopt-a-Mountain, Adopt-a-Mining Forest Champion

for 2007DENR-MGB

Adopt-a-Mountain, Adopt-a-Mining Forest Champion

for 2007DENR-MGB

PARTNERSHIPSPARTNERSHIPS

CAMARADERIECAMARADERIE

TRUSTTRUST

COOPERATIONCOOPERATION

CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITYRESPONSIBILITY

ENVIRONMENT and COMMUNITY DEVELOPMENT PROGRAM

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PARTNERS FOR DEVELOPMENTPARTNERS FOR DEVELOPMENT

Should not be viewed as mere project Should not be viewed as mere project beneficiaries but as...beneficiaries but as...

COMMUNITIESCOMMUNITIES

BUILD COMMUNITY PARTNERSHIPSBUILD COMMUNITY PARTNERSHIPS

...believes that it is the community ’s basic right to participateparticipate in activities that will directly affect their lives.