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MARCOPPER
(Group Case Study)
In Partial Fulfilment
of the Requirements for the Course
BUS560M
Submitted by:
GROUP 1
Anyayahan, Noreen F.
Lim, Cyril Jade A.
Macasaet, Ruby Ana I.
Retardo, John Christopher R.
Marissa C. Marasigan
Faculty
TABLE OF CONTENTS
Content
Page
A. Rationale
...3
Company Profile
...3
TOWS Analysis
...5
...5
...5
...7
...9
D. Evaluation of ACA
..14
..15
F. Implementation Steps
.15
........16
IV. Reference
I.
Company Profile
Rationale
Marcopper Mining Corporation (MMC) has been operating in the island of Marinduque, a province
in the Philippines since 1969 and its operation created a market for local goods, services and
provided electricity to the province. However, the mining operation in the island had caused
innumerable problems which include serious health issues of employees and the inhabitants in the
nearby communities as well as environmental problems in the towns where the mining is done.
Mining in the area has also polluted waterways and agricultural fields which adversely affected those
who depend on fishing and agriculture for their livelihood.
Despite the harms mining had brought to the island, the government of the Philippines made no
immediate action in these looming problems. As a matter of fact, the government actively seeks to
bring investments, like mining in the country. The Mining Act in 1985 which allows mining companies
to own 100% equity with lax environmental regulations was passed to attract mining companies. The
citizens of Marinduque struggle to get their voices heard but their claims are largely ignored. There is
a conflict of interest between the government decisions to pursue its development due to the
problems arise from its environment and the peoples livelihood.
Company Profile
Marcopper Mining Corporation explores, develops and operates mining claims which
produces copper, silver and gold. The companys headquarters is based on Canada, which also
operates on fishing fleet and produces canned tuna through its subsidiary, Mar Fishing Company.
Inc.
Placer Dome was formed in Vancouver, Canada, in 1987 and is the 5th largest mining industry in
the world. Their aim was to improve the standards of the people living in the regions where mining
operations takes place. Placer Dome owned 40% of Marcoppers two mine sites in Marinduque and
filled the top management positions. Department of Environment and Natural Resources (DENR) &
Mines and Geosciences Bureau (MGB), Government Agency responsible for implementing the
Philippine Mining act of 1995.This law lays down the procedure and guidelines on how the mineral
resources of the resources can be exploited.
The DENR is in charge of managing state mineral resources between the government and mining
companies. The DENR issued the Environmental Compliance Certificate to Marcopper in 1990
which allowed them to use the Tapian pit for mine waste storage.
TOWS Analysis
THREATS
1. Lax environmental regulation in the Mining Act of 1995
Basis: According to the 2nd page of the case, the Mining Act of 1985, which allows a mining
company to own 100% equity, and the lax environmental regulations, are in existence to attract
companies. These enabled Marcopper to exploit the islands resources ignoring their operations
ill effects to the islands inhabitants and the environment.
2. The government supports multinational corporations and actively seeks to bring their
investment to the country
Basis: From page 2 of the case, The government of the Philippines supports multinational
corporations and actively seeks to bring their investments, like mining, into the country.
WEAKNESSES
1. Mining endangers the lives of the people and damages the environment.
Basis: From page 1 of the case, Mining in the area has polluted waterways, killed fish, and
flooded agricultural fields. People were being poisoned indirectly through the fish and water, and
also, workers were dying from direct contact with the mining operations.
STRENGTHS
II.
CASE NARRATIVE
In 1969, the Marcopper Mining Corporation began mining operation with Placer Dome who
co-owned and managed the corporation in Mt. Tapian site which is considered to be the first
mining location. In 1975, a blanket permit was given to Marcopper, which allowed them to dump
mine tailings into the Calancan Bay.
From 1975 to 1991, Placer Dome denied the dumping that destroys the livelihood of
fishermen. Within this period, a tunnel was also built from the mine to drain rainwater which puts
waste to Boac River.
In 1990, Since Mt. Tapian reserve was already depleted; Marcopper opened the San Antonio
copper ore body and using Mt. Tapian instead as storage for mine tailings. Due to protest, the
tunnel which leads from the Tapian pit to Boac River was sealed. DENR allows them to operate
for 10 years using Tapian pit as a tailing dam.
Fears that Tapian would not be able to hold the waste led Marcopper to investigate Maguilaguila dam in Mogpog River. The people sent numerous petitions to stop the dam. Despite the
protest, the dam was completed in 1992; the villagers started noticing waste flowing into the river
as well as the appearance of dead fish. Situation worsened in 1993 rainy season caused by the
intense flooding of combined toxic silt and water that destroyed the town due to the collapsed of
dam.
Three years later, on March 24, 1996, the plug that sealed the Tapian pit tunnel to the Boac
had fractured releasing up to 2-3 million tons of mine waste leaked into the Boac River. The
immediate effect was disastrous - flash floods isolated villages, agricultural fields were inundated,
and the drinking water residents relied on was contaminated. Food sources and livelihood of
those who do not work for marcopper were also destroyed.
On April 17, 1996, a report was released by the Department of health stating that 9 residents
from the area was tested to have zinc levels in their blood more than 200% above safe limits.
Water samples in the area found levels of contamination 1,300% above the human tolerable level
of .5 microgram per 1/1000 liters of water. Residents in the neighboring areas also experienced of
skin irritations and respiratory problems, which may be attributed to the poisonous vapors emitted
from tailings. Despite these findings, Marcopper held on to the claim that the tailings were nontoxic.
Marcopper and Placer Dome halted mining operations and closed down all mining sites.
Being questioned about how the environmental laws were enforced throughout the years, the
government tried to cover up its negligence. The DENR undersecretary who signed the ECC
denied that he knew about the Tapian drainage tunnel though residents in the area says
otherwise, that they knew about the tunnel for almost 20 years. The undersecretary claimed that
the company and the experts who made the environmental impact study did not mention anything
about the tunnel. It seemed that Marcopper knew of the leak in the drainage tunnel well in
advance of the accident, as there had been a long history of problems. In August, 1995, with the
help of a geotechnical consultant, Marcopper plugged leaks in this tunnel. Two months later, in
October, 1995, another hole was plugged after a minor leak. The Mines and Geosciences
Bureau, who monitored the companys compliance with the ECC, made no report of these
incidents. Placer Dome claims it met every environmental standard set by the government.
This accident became known as the "Marcopper Mining Disaster". It brought Marinduque to
national and international limelight. Experts and scientists poured into the island province to study
the disaster, it root cause and its impact, and eventually learned of the problems that had been
occurring for years. Due of the outpour of support coming from outside the island, the people of
Marinduque had more power to mobilize.
A. Problem Statement/s
What can be done to address the problems (both environmental and economic) created by the
mining tragedy? Should Marinduque implement a total mining ban in the future?
CASE ANALYSIS
Interests
They are the investors (of billions of Pesos) who will be greatly affected
Mining Companies
They are the informal miners that are relatively small relative compared
to Large scale miners. A good number of small-scale miners are illegal,
and proliferates due to backing of local politicians. They are also
concerned with earning profit from the mine ores and satisfying their
personal interests.
Local Community/
The local residents of the area of mining activity are the direct recipients
Inhabitants of the
of the social service the government mandated the large scale miners
Island
to provide with. Jobs in the mining are created for them. Aside from the
employees of Marcopper, they are the ones that are also affected by
the side effects of the environmental damage brought by the mining
operations.
In general, the local and national government are concerned with the
Government
Geosciences Bureau
The Decision Criteria and Weights table below aims to showcase the basis of choosing the best
option with regards the nature of the case. This sets as a guide in choosing the best course of action
that the government must take. Each criterion is designated with equivalent weight to quantify its
importance. All criteria sum up to 100% in weight.
Decision Criteria
Description
Weight
Rationale
It is important to determine
Virtue:
Adherence to ethical
business practices
life.
affect individuals.
Common Good:
development
Protecting the
constitutional rights of
all stakeholders
stakeholder involved.
20%
20%
15%
Utilitarian:
Maximization of
economic benefit
Justice and
Fairness:
Upholding social
justice
15%
cost.
involved.
Care:
Promoting special
relationships and
stakeholders.
The Alternative Courses of Action, also known as ACA, are confined within the walls of the decision
criteria vis--vis the objectives of the case in respect to the problem statement. Each ACA is tested and
run using the Markkula Framework to assess the ethical position of the proposition. Below are the
proposed ACAs:
1. Extend the Executive Order No. 79 which suspends the Mining Industry at its present
state. No new mines will be allowed to open. (Maintain Status quo.)
This alternative proposes to extend The Institutionalizing and Implementing Reforms in the Philippine
Mining Sector Providing Policies and Guidelines to Ensure Environmental Protection and Responsible
iii
Mining in the Utilization of Mineral Resources known as Executive Order No. 79 , which suspends the
Mining industry at its present state. No new mines will be allowed to open. This proposal will tend to
devote further time in research, in order to formulate a more viable solution. This will also give time for
the government bureaucracy to do away with corruption and defer extensive mining indefinitely.
Markkula Framework
The cost for government for this alternative is the loss in potential income that
should have been earned, the loss of jobs that should have been created, and
Utilitarian
the loss in opportunity for rapid economic growth. The benefit is viable as it
allows our denuded environment to recover.
Rights and
Duties
Justice and
Fairness
This will promote justice and fairness to the community because they will be
valued as individuals who seek justice for their right to have a clean
environment.
Virtues
There is restraint in which the local government is holding back because of the
potential revenue that may be generated from the mining activities. Another
virtue is cautiousness, wherein there is avoidance of rashness for the
government and there is attention to safety of the people.
Common Good
Since no new mines will be implemented and be allowed to open, it will give
time for the government to implement clean up for the environment which
will benefit the province of Marinduque.
Care
This will promote care for the people as the mining activities will be stopped.
There will be stoppage of environmental damage upon the closure of mining
activities in the province.
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iv
Brazil, Chile, Australia and Canada all saw their economies grow thru mining. This course of
action does not discount the fact that mining activities can bring wealth and jobs to the
country. Chamber of Mines President, Philip Romualdez, argues that the mining sector recorded
an outflow of P10Billion in mining investments since 2011(because of EO79) and will lose another
$4Billion in investments if there will be a total ban on mining.
The cost of this option for the government is high. With the unaddressed corruption at all levels of
government it is prone that a good number of politicians will try to circumvent law to earn
kickbacks from mining. It is highly probable that this option would fail if not managed properly and
we would be left with a deteriorated environment. The benefit for the economy should this be
successful is worth the risk. With responsible mining, it will escalate economic growth and
stakeholders opportunities.
The efficiency of this alternative policy depends on how much government is willing to be
transparent. Corruption plays a major role in the delivery of government services. Many can be
said how much deviance can go in the regulation of the mining industry. It all bogs down to
political will and leadership.
This option will be beneficial to both mining companies and the residents in
the mining areas. This will cost both the national and local governments
certain amount during the planning and research phases but will yield
favourable results afterwards. Mining in the area provides jobs to the
Utilitarian
residents and create market for other industries which in turn help uplift the
economy of the island province. While the comprehensive management plan
will ensure that mining operations comply with the standards set by the
authorities. This will prevent the disaster from happening again.
Giving residents a source of income and livelihood, this alternative will protect
the residents rights to employment and livelihood. The will also protect the
Rights and
Duties
rights of the future generations to have live a more convenient life with
access to basic life necessities. This will enforce the governments duty to
protect and prioritize the welfare of its citizenry. The selective permission on
mining operations will exhibit governments effort to strike a balance between
economic development and environmental welfare. In the end, the main goal of
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this alternative is to promote the residents right to descent life and safe
environment at the same time the mining companies right to reasonable
returns on their investments.
This alternative will promote Distributive Justice and will allocate both benefits
and responsibilities to all stakeholders. Applying the concept of Egalitarianism,
everyone will share the responsibility of maintaining a lawful and socially
Justice and
Fairness
Virtues
Common Good
and management programs for the local community, the technology transfer,
and management skill and foreign link exposure the industry would be
receiving.
Care
This alternative shows care to all stakeholders. The government will try to
balance the economic gains and the use of natural resources. The welfare of
the people of Marinduque will be taken into consideration as the environmental
plan would aim to prevent the disaster that happened in the island and try to
restore the the parts of the island that were damaged. Shareholders of mining
companies under this alternative will earn a reasonable return to their
investments and the government will earn its share of revenue to be used for
public welfare.
vi
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The Philippines has relatively strong laws designed to protect the environment, communities and
indigenous peoples. The reality, however, is that where investments are concerned the law is too
often viewed as a mere technicality to be overlooked or circumvented. Human rights abuses and
misreporting are clearly associated with some current mining activities. It is of concern that those
in government and international agencies seem to lack the capacity or inclination to challenge
and end such misconduct. (Philippine Solidarity Network of Aoteroa, 2006)
From these findings, we can conclude that despite the relative strong laws designed to protect the
environment, communities and indigenous peoples, the law seemed to be unforceful and there
are still several violations noted. From the facts of the case, the residents of Marinduque and
Philippines as a whole has not benefitted from mining activities and is now worse because of it.
Another concern that will be addressed by this Corruption is a serious problem in the Philippines
and it can be expected that plans for extensive mining operations in remote areas requiring
regulation and monitoring will make it worse.
Markkula Framework
The cost for the government for a total ban is enormous. It will cause a loss of
income from taxes from mining companies, and the potential of economic
growth through job opportunities and revenues brought about by mining
exploration. However, its benefit would be the preservation of the environment,
Utilitarian
the security of food supply for the upcoming generations and that is
unquantifiable. In the long run, it will also cause savings to the government for
the costs for environmental clean-up and funds for restoration of livelihood for
the affected residents.
The alternative will protect the rights of the future generations to have an
equal right to the limited resources of this planet; rights-of-the-unborn to
experience the earth in as good condition as we found it, if not better; rights of
nature (biocentrism/deep ecology) which is at least equal to that of human
beings and possesses certain rights, not the least of which is the right to
exist. This option will also help the government to recognize the right of the
people to a healthy environment. It shall be the duty and responsibility of
each individual to contribute to the preservation and enhancement of the
environment. PD 1151 (Philippine Environmental Policy, 1977).
Justice and
Fairness
This option would be fair for both the current and the future generations to
experience a healthy and sustainable environment. It will also serve justice to
the nature and protect its rights against abuse and misuse.
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Virtues
The total on mining industry will promote virtues of care to our nature,
consideration of the future generation, cooperation in protecting and creating
a sustainable environment, fairness and justice among the usage of
resources among the generations, love for our Mother Earth and countrymen,
moderation in the use of our limited resources and prudence knowing that not
all produce of nature are renewable.
Common Good
This alternative will be fair for both the current and the future generations to
experience a healthy and sustainable environment. It will also serve justice to
the nature and protect its rights against abuse and misuse.
Care
D.
This option will exhibit care for the protection and preservation of our Mother
Earth and will help to create a sustainable environment for the current and
future generations.
Evaluation of alternatives
Decision Criteria
Weight
ACA 1
Status
quo
ACA 2
Amend
existing law
ACA 3 Total
ban on mining
industry
Score
WS
Score
WS
Score
WS
Virtue: Adherence
to ethical business
practices
20%
20%
4.00%
40%
8.00%
40%
8.00%
Common Good:
Promotes dignity
and allows total
human
development
20%
25%
5.00%
45%
9.00%
30%
6.00%
15%
20%
3.00%
40%
6.00%
40%
6.00%
Utilitarian:
Maximization of
economic benefit
15%
20%
3.00%
35%
5.25%
45%
6.75%
Justice and
Fairness:
Upholding social
justice
15%
25%
3.75%
40%
6.00%
35%
5.25%
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Care: Promoting
special
relationships and
goodwill among
men
15%
25%
3.75%
22.50%
45%
41.00%
6.75%
35%
5.25%
37.25%
E.
Based on the careful evaluation of the alternatives, the recommended course of action is
ACA #2 which is to establish a comprehensive, strategic environmental management plan for
Marinduque which would help integrate mining operations into the socio-economic development
in the province. It is a fact that the mining industry has advantages which continue to
substantially contribute to the wealth and income of a country. Several countries have taken
advantage of mining as a means of growing their respective economies. Thus, mining in the
Philippines can truly help boost the overall economy of the country. However, mining can also
cause serious danger and threat to the people, environment and community. The mining industry
can bring about permanent disaster if not properly regulated. Thus, it is important to implement
existing laws designed to help shelter the environment, community and human rights.
Furthermore, it is important to ensure the active involvement of the public sector such as DENR,
DTI and the NGOs. By doing this, there will be socially responsible mining activities which can
add to the overall development of the economy of the country as well as protecting the every right
of environment as a whole.
F.
Implementation Plan
Step 1: Create more strict rules in the construction of laws and directives in the mining industry
with the main purpose of protecting the people, environment and community. Also, there should
15
be an amendment of the present RA 7942 (Mining Act of 1995) which administers the mining
industry in order to properly implement the environmental regulations.
Step 2: Establish a transparent system by the active participation of NGOs as well as private
institutions to ensure strict control of the mining industry.
Step 3: Properly identify the role of DENR in the protection and regulation of the environment. In
addition, DTI should continue to focus on its role in promoting, supporting and encouraging the
mining industry.
Step 4: There should be proper execution in the part of the government in order to implement the
laws and regulations in the mining industry. It is important for the government to ensure
compliance and employ reprimands to violators if necessary. Politicians should properly exercise
their political will and determination to avoid corruption to help implement the different laws
pertaining to the mining industry.
Step 5: All parties including the public and private sector should participate responsibly in the
implementation of the laws and regulations in order to achieve socially responsible mining
operations.
IX.
References
Environmental Justice Case Study Marcropper in the Phillippines; available online through
http://www.umich.edu/~snre492/Jones/marcopper.htm#References
ii
Velasquez, M. (2012). Business Ethics: Concepts and Cases, 7th Edition. Pearson Education South
Asia, Singapore: Pearson.
iii
Malacaan Official Gazette (July6, 2012). Executive Order No. 79 series of 2012; available online
through http://www.gov.ph/2012/07/06/executive-order-no-79-s-2012/
iv
Philippine Solidarity Network of Aoteroa (2006).These extracts from the 63 page Report are reproduced
with permission. The Report can be read online through
http://www.iucn.org/themes/ceesp/Wkg_grp/Seaprise/Mining%20in%20the%20Philippines%20%20Concerns%20and%20Conflicts.pdf
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