MGB stands firm on its imposition of penalty against Philex

September 27, 2012 9:01 pm 

MANILA, Sept. 27 — The Mines and Geo-sciences Bureau (MGB) stood firm on the P1.034 billion penalty imposed against Philex Mining Corp. for violation of the Mining Act after the company failed to contain mine wastes within its tailings pond.

Leo Jasareno, MGB director, told reporters on Thursday that there is no provision in the Mining Act of 1995 qualifying that such penalty/fee could be waived in case of force majeure.

Jasareno also noted that the fine against Philex was just for “dirtying” the environment with the waste sediments that spilled in the surrounding environment.

Under the Mining Act, mining companies are required to fully contain within the tailings pond all mine waste and sediments.

“It must be 100 percent contained. From a technical point of view, Philex was not able to comply, so they must pay,”Jasareno said.

In a letter dated Sept. 26, the MGB informed Philex President Eulalio Austin, Jr. of the P1.034 billion penalty based on the 20.66 million metric tons of sediments discharged from Padcal's tailings pond number 3.

The penalty excludes the P200,000 per day arising from the violation of the Clean Water Act; and P50,000 per violation committed under the terms of the company’s Environmental Compliance Certificate.

The MGB chief noted that government investigators were able to compute the total volume of the sediments using Philex’s own software.

The government regulator asked Philex to submit comments within 7 days regarding the penalty and liability, adding that the MGB followed standard procedure under the Mining Act.

“We gave them seven days to present evidence and refute the report, as part of due process afforded to them by law," Jasareno said.

“And then we’ll give ourselves seven days to deliberate. After we make a decision, then they’ll have 15 days to comply,” he added.

In a disclosure to the Philippine Stock Exchange, Philex on Thursday said that the MGB has absolved the company from any fault in connection with the August 1 spill at Padcal Mine, in Benguet.

“MGB officially concluded in its report that Philex personnel were not remiss in the maintenance and operation of Padcal Mine’s tailings pond facility,” said Michael Toledo, senior vice-president for Corporate Affairs at Philex.

The executive stressed that this was confirmed by the regulatory investigations and the contemporaneous reports of monitoring and inspection maintained and submitted by Philex to the MGB.

He affirmed that Philex will comment on the report and will contest the attempt to impose the fine considering that MGB itself has effectively confirmed that the spill was caused by force majeure in the form of the historically unprecedented heavy rains generated by typhoon Gener at the Padcal site.

“But Philex, contesting the unfair imposition of the fine, will not in any way affect its fundamental commitment to remediate the effects of the spill on the environment and surrounding communities even if caused by an event outside its control,”Toledo said.

He said the rainwater reached 331.80 millimeter (mm) on the day of the spill, far exceeding by almost 100mm the 50-year rainfall record for Padcal of only 234.50mm for a single day.

“It is grossly unfair to penalize Philex and impose a huge fine on it when the government agency imposing the fine itself has confirmed that Philex is just a victim of force majeure, event or an act of nature which it has no control,” he said.

Toledo stressed that one of the most basic principles of fairness and of law is that no party should be held responsible or be penalized for events over which it has no control.

“In fact, this is so basic that even Philex’s MPSA with the government exempts Philex from the performance of its obligations if the cause is force majeure and so, outside Philex’s effective control,” he added, referring to the Mineral Production Sharing Agreement.

On Wednesday, Toledo announced that MGB has confirmed that the company had a system in place for the maintenance and monitoring of its Tailings Pond No. 3 (TP3) and secondary facilities during the accidental discharge of sediment in Padcal, and that its personnel were diligent in the performance of their duties.

“The findings came as no surprise because the company’s environmental management system, including the operation and maintenance of TP3, has long been ISO-compliant and -certified,” he said, emphasizing PMC’s ISO-14001 certification for years 2002, 2006, and 2008, and the latest certification issued on May 10, 2011.

Jasareno, however, said that the report submitted to Philex only includes the amount of sediment discharged from the tailings pond, adding that the liability aspect is still under investigation.

“The report only covers the extent of the leak. The liability aspect [of the company] is still under investigation,” he said, noting that monitoring of the tailings pond’s penstocks and drainage tunnels was only done once a year.(PNA)

GHG/JKG/UTB

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