The Department of the Environment and Natural Resources (DENR) on Tuesday directed Lafayette Philippines Inc. to conduct a three-stage, 30-day test run to determine the overall environmental soundness of its mining operation in Rapu-Rapu Island, Albay, as well as the adequacy of measures it has put in place to prevent a repeat of the two wastewater spills last October.

"Taking into consideration all the facts and findings, and all the opinions expressed on the various issues, the DENR feels that the best option to take is to allow Lafayette to resume operations subject to certain stringent pre-conditions," read the dispositive portion of the DENR decision.

The DENR said the test run will also determine the production efficiency of Lafayette in processing copper and zinc, as well as the sufficiency of the environmental safeguards and the responsiveness of the company to emergencies.

"Before, during and after the test run, certain conditions would have to be met. After the company complies with all these conditions, a final lifting order shall be issued to Lafayette for it to resume full operations. The test run shall be open to the public and third-party experts," the DENR said.

During a press conference announcing the DENR ruling, Environment Secretary Angelo T. Reyes said Lafayette's operation will be put under "microscopic scrutiny" by the DENR, the scientific community and the general public.

"They can consider this 30-day period as an acid test, no pun intended," Reyes said.

The DENR said it sees its decision as "the best for all concerned, particularly for the Rapu-Rapu community." It cited the following reasons in reaching the decision:

• An abandoned open pit mine is not an attractive proposition as it will simply cause small miners to descend on the area and operate without environmental and safety measures;

• Without proper decommissioning, the generation of acid mine drainage will continue and worsen pollution in the area;

• In case of improper decommissioning, the government and, ultimately the Filipino taxpayer, will have to shoulder the considerable cost of remediation and rehabilitation;

• Allowing Lafayette to resume operations will allow an ECC-consistent mine rehabilitation and decommissioning plan to be implemented.

• The mine brings about economic benefits to the host communities in the form of 900 direct jobs, P3 billion in government revenues (over the six-year life of the mine) and P5-million per year in project commitments.

In coming up with the decision, Reyes said that the DENR exhaustively reviewed the findings of the Rapu-Rapu Fact-Finding Commission, consulted technical experts and all concerned groups, and conducted on-site validations.

"The DENR came to the conclusion that the two tailings spills were preventable; that Lafayette was guilty of operational, technical and management lapses; and that the company's project does not appear to measure up to the standards of responsible mining," said Reyes.

The DENR chief also cited the failure of the department to adequately monitor the Rapu-Rapu operation and, consequently, failed to immediately detect the violations that opened the possibility of environmental accidents.

As a final point in its summary, the DENR said that "the sharing of benefits from the mineral exploitation of Rapu-Rapu island has clearly been grossly unfavorable to the Philippine government."

"The Rapu-Rapu Commission actually assailed the grant of incentives by the PEZA to RRPI, questioning the 'sheer disparity' and 'lack of equity in the way the benefits from the mining activity are shared.' At present, the sharing of benefits between the Philippine government and RRMI/RRPI is 23%-77%, based on the feasibility study of the Rapu-Rapu Polymetallic Project. Modeling the same updated study with the assumption of 'no incentives' will yield a 54%-46% sharing," said the DENR.

In connection with Lafayette's lapses, the DENR said it noted that Lafayette has substantially complied with 21 remedial measures and conditions it has imposed on the company.

Among the measures implemented by the company were corrective measures to prevent the failure of its pumps at the detoxification plant and events pond; de-silting of the creeks where the wastewater spilled; increase in the height of both tailings dams; and the submission of a comprehensive Environmental Management System.

To enable the test run to be conducted, the DENR will issue a 30-day Temporary Lifting Order (TLO) on the cease and desist order imposed by the Pollution Adjudication Board (PAB) on the company following the two wastewater spills on October 11 and 31, 2005.

"The exploitation of a country's mineral resources can only be justified if it does not irreparably damage the environment and if it benefits the community and the nation as a whole. This is beyond all argument," said the DENR in opening its summary report on Rapu-Rapu.

The DENR investigation showed that the first wastewater spill was caused by the failure of the main discharge pump that caused the backflow of mine tailings into the events pond and into the Alma and Pagcolbon creeks.

"With respect to the second incident on Oct. 31, the DENR found that this was caused by an induced spill in the lower tailings storage facility after heavy rains raised the water levels in that pond to levels high enough to cause fear of dam breaching or collapse," said the DENR.

In effect, the two spills was caused primarily by the fact that Lafayette "had wrongfully started to fully operate even before its completion of the required environmental infrastructure," said the DENR.

For its part, the DENR said it will take the required appropriate actions to resolve hanging issues vis-à-vis the RRFFC report.

These actions include establishing consultative councils for environmental concerns, coordinating with the Department of Health for an epidiomological study in Rapu-Rapu and nearby coastal municipalities of Sorsogon; requesting the Bureau of Internal Revenue to undertake an investigation of the issue concerning alleged underreporting of ore production; and the creation of a working group to study the creation of an independent Mining Authority. (DENR Public Affairs Office)

June 13, 2006