DOE Allows Mining of Rich Coal Deposits in Catanduanes - BM

VIRAC, Catanduanes—The Department of Energy (DOE) has approved the mining of this island province’s estimated 1.2 million metric tons of high-quality coal deposits under the fourth Philippine Energy Contracting Round (PECR) of 2009.

A vision of hell in North East India, where the earth is literally on fire as vast subterranean coal fires burn out of control beneath towns and villages in the Jharia coalfields in Jharkand state.

Based on the prevailing world market price of coal, this volume is worth $200 million (P9.4 billion), a recent report citing a US geological survey said.

The Catanduanes coal district covers 8,000 hectares in 14 upland barangays within Panganiban, San Andres and Caramoran, all major abaca and coconut producing municipalities sitting at the heart of the 1,511.5-square-kilometer island.

Monte Oro Resources and Energy Inc. (Morei), a private Philippine company formed in 2005 to engage in mining and energy investments, holds a mining contract for the area awarded by the DOE under the second PECR that year.

Morei is chaired by Walter Brown, also a chairman of Philex Mining Corp. Wilson Sy, former chairman of the Philippine Stock Exchange, is also reportedly a member of its board of directors.

FEC Resources Inc., chaired by Larry Youell, has entered into a joint-venture agreement with Morei. The terms of agreement provides, among others, that the latter acquires a 30-percent participating interest in GSEC101, the mother company of FEC, in the amount of $1.5 million.

The participation of Morei in the service contract application with the DOE entitles the joint venture to the Filipino Participation Incentive Allowance that equates to 7.5 percent of gross proceeds from any future production.

Morei’s mining contract with the DOE covers two blocks: 2,000 hectares within Panganiban and 5,000 hectares in San Andres and Caramoran.

The entire area is capable of yielding 1.2 million metric tons of top quality coal with high heating value, a US geological survey said.

Actual mining operations, however, have yet to take place because of opposition by several sectors, including local government units (LGUs) and the Catholic Church.

On October 30, 2008, DOE Secretary Angelo Reyes issued Small-Scale Coal Mining Permit 2008-018 to Policarpio Torres, covering the 2,000-hectare parcel of coal-bearing land in barangay San Miguel, Panganiban.

Torres of Tambongon in Viga town presented the documents to the municipal legislative council of Panganiban on June 15 and sought its endorsement for his mining operation in the municipality.

Under the permit, valid for five years, Torres will pursue small-scale coal-mining operations at a production rate of 7,333 metric tons per year to be done under the supervision of Morei when its coal-operating contract is converted to production.

All coal produced by Torres shall be sold to Morei at a mutually agreed price, the permit stated.

The town council turned down Torres’s request for endorsement as Norma Aquino-Camantigue, vice mayor said “there are no records showing that DOE and other concerned government agencies complied with the provisions of the Local Government Code, particularly with regards to prior consultation with LGUs, NGOs [non-government organizations] and other sectors affected by the proposed coal-mining exploration and production.”

The local hierarchy of the Catholic Church, headed by Bishop Manolo de los Santos also reiterated its stand against the mining operations.

Earlier, the bishop issued a statement of concern on mining that was read in all churches in the province, appealing to local and national leaders to stop all mining operations in the province in the absence of public consultation with affected sectors.

The statement said Catandunganons have the right to know the disastrous effects mining would bring to the island and its people and that the island cannot shoulder such negative effects.

“We don’t want our island and our people to suffer from such tragedies brought about by irresponsible mining activity,” the bishop stressed, asking the faithful to support and stand by the diocese in the struggle against large-scale mining and the blatant exploitation of the island’s rich natural resources.

A technical working group, the Katandunganon Kontra Mina (KKM), evaluated the effects of the coal mining operations.

The group said large-scale mining operations will directly cut down local abaca production and adversely affect the province’s reputation as one of the world’s leading producers of abaca.

The vast plantation of tiger grass, another of the island’s export products, will be obliterated while its coconut industry and forest cover will be downgraded to an equivalent of 7,000 hectares, the KKM said.

Coal is the world’s leading source of electricity today. Unfortunately, it is also the No. 1 source of carbon-dioxide emissions responsible for about 70 percent of man-made global warming, the group said.

Experts, however, say coal will remain an important global energy source despite its reputation as the world’s dirtiest fossil fuel, the group added.

Reyes, meanwhile, said in a statement, “We have undertaken a thorough process of resource evaluation to yield high exploration success that is in line with our goal of efficient development and production of the coal areas.”

Ultimately, the government hopes that coal areas in the country will increase local production to serve the country’s increasing energy demand, he added.

Rufino Bomansang, a Philippine energy resources expert and vice chairman of MG Mining and Energy Corp., said in a statement that untapped coal resources in the Philippines can produce 1,000 to 2,000 megawatts of electricity in at least 25 years to provide cost-effective alternatives to imported oil and coal.

While coal mining, especially open-pit mining and coal combustion, can potentially have very serious impacts on the environment, these concerns can be substantially minimized, if not totally eliminated, with the use of modern technology, Bomansang said.

“I also fully share the vision of environmentalists of a world that is as carbon-free as possible using primarily renewable-energy sources. I am an unpaid board chairman of a renewable-energy nongovernment organization and also of a renewable-energy developer,” he added.

Catanduanes coal is part of the vast energy source prospects in the Bicol region being eyed by the DOE for exploration. The others are in Batan Island of Rapu-rapu, Albay; Cataingan, Masbate; and Gubat, Bacon and Prieto Diaz in Sorsogon.

A coal-operating contract has already been issued by the DOE in April covering Bacon and Gubat.

Written by Danny O. Calleja / Correspondent
Monday, 13 July 2009 21:03
Source: Business Mirror