Local protests have escalated over the impacts of Australian mining company Lafayette on the fragile island ecosystem of Rapu Rapu in the Philippines. Instead of enforcing or at least encouraging good corporate citizenship, the Australian government is uncritically promoting and defending the activities of Australian mining companies abroad.

The current global resource boom has Australian companies and investment agencies vying to cash in. At the same time, countries such as Indonesia, Papua New Guinea and the Philippines are under intense pressure from international institutions, investors and overseas governments to show that they are committed to creating favourable legal regimes and a stable investment environment for foreign companies to exploit these resources.

Unfortunately this ‘stability’ is frequently a euphemism for the willingness of local governments to overlook the enforcement of environmental legislation and regulations that impact on the interests of foreign investors. Too often countries like the Philippines, which still pays about a third of its gross domestic product in debt repayments, have little choice but to bow to economic pressure and to foreign economic interests at the expense of their people and environment.

In the Philippines, with community opposition to the activities of Australian mining companies on the rise, it is becoming increasingly obvious that the backers of these companies, including both the Australian government and the financial institutions that invest in them, are failing to respond adequately to the problem.

Junior Australian mining company Lafayette is the primary owner and operator of what is termed the flagship project for the Philippines mining industry, the Rapu Rapu Polymetallic Mining project on the small island of Rapu Rapu.

The Philippines President recently appointed a fact finding commission to look at the human and environmental costs of the mining operation in response to widespread community outrage over two major pollution incidents at the mine. These incidents led to major fish kills that extended into the coastal waters and seriously affected the local fishing industry.

The commission found evidence, not only of gross negligence by the company that caused the two avoidable toxic waste spills, but also of possible underreporting of mineral production, fraud in securing tax exemptions and the illegal use of various corporate structures. Other reports highlighted the minimal economic benefits of a project that had secured major tax holidays and exemptions. The Commission recommended that the operation not be allowed to reopen, and that a moratorium on mining on the island be instituted.

In response, unnamed foreign investors warned in the media that if the project did not succeed, confidence in the Philippines as a location for foreign investment would evaporate. The Australian ambassador to the Philippines went so far as to make public statements earlier this year urging the Philippines government to allow the mine to reopen as soon as possible. The statements sparked community protests outside the Australian embassy in Manila.

It apparently did not occur to the investors or the Australian government to express a lack of confidence in an inexperienced mining company whose conduct across a range of social, environmental and corporate issues was, based on the evidence unearthed by the commission, at the very least highly irresponsible.

Nor did they appear to question the appropriateness of mining on a small fragile island ecosystem when scientific evaluations had highlighted major long term risks to drinking water resources, existing livelihoods and industries, and where the existing impacts of the recently established mine were already unacceptable to a growing segment of the local population.

Instead, the crisis of confidence was directed towards the Philippines government’s mining regime should they not permit Lafayette’s operations to recommence.

The Philippines government went against the recommendations of its own fact finding team and allowed the mine to start a 30-day test run in mid July. Local community opposition to this move has now led to a class action court case seeking temporary and permanent injunctions against the resumption of operations, and protests around the mine continue from Manila to the Provincial Capital to the island itself, and are supported by church groups, scientists, NGOs and local level government bodies. Philippines TV personalities have even joined themselves to the class action on the basis that such decisions are matters of concern to the entire nation.

Rapu-Rapu Island

Interventions by the Australian government and investment interests in mining activity are not isolated events. The Indonesian government has experienced heavy handed tactics by Australian corporations several times in recent years. It bowed to threats of international arbitration should it not revoke legislation preventing open cut mining in protected forests in early 2003, and last year took the bold step of standing up to foreign pressure when it brought charges against the Newmont mining company for polluting a bay by dumping its tailing and toxic mine waste directly into the ocean. Questions in Parliament submitted by Greens Senator Bob Brown exposed the proactive role that the Australian government has played in lobbying the government in the region on behalf of Australian companies.

Blaming the Philippines government’s mining regime policies for the possible failure of a project – rather than a corporate actor whose conduct has been found to be both unethical and illegal – is both misleading and immoral. This is particularly the case when it has the affect of pressuring a government to ignore its own people’s concerns and when the health, wellbeing and livelihood of populations who rely upon a healthy and functioning natural environment for their survival is at stake.

Rather than defending the behaviour of irresponsible Australian mining companies, the Australian government and our investors should instead ensure that these actors are bound by standards which will make them acceptable and accountable to both the societies in which they operate and to the Australian public whose money is invested in their activities.

Canada is currently holding a roundtable looking at means of regulating Canadian mining companies abroad after a parliamentary inquiry recommended the government adopt concrete regulatory measures to end human rights and environmental abuses committed by Canadian companies in other countries. At the same time, international investors, constituting around 80% of project finance funding globally have signed onto common minimum standards, called the Equator Principles, for environmental and social issues in projects they support. In contrast, here in Australia efforts at addressing these issues in 2000 through a Corporate Code of Conduct Bill were dismissed by the major parties. Labour deferred the issues stating "Its time has not yet come", while the Liberal Party opposed it altogether. Meanwhile, only one Australian bank has signed up to the global social and environmental standards, and ANZ, the main Australian player in mining and forestry projects across the Asia Pacific has, as yet, refused to do so.

It appears that here in Australia we still have our head in the sand, or at least deep in a mine pit, on core issues of corporate social responsibility. How much destruction must Australian companies wreak, and how much must the resentment of populations in neighbouring countries grow before our governments, companies and investors stop backing destructive mining projects and take meaningful steps to address these issues?

If the situation at Rapu Rapu is any indication, and indeed it seems to be closer to the rule than the exception, such measures are well overdue.