PROFILES OF THE CORPORATE SOCIAL RESPONSIBILITY (CSR) PRACTICES OF

PHILIPPINE MINING FIRMS1

Introduction

The increased awareness of environmental impacts, the socio-economic implications of mining and a
downturn in productivity, have highlighted the need for mining companies to adjust their business
management process. With the negative perception that marked the mining industry’s development
over the years due to issues such as the extent of damage to river systems and farmlands resulting from
the discharge of mine tailings2, socio-economic dislocation of families and indigenous peoples in
mining areas, and open pit mining methods, a sense of urgency for concerted action has been
expressed as a search for a sustainable future.

In order to manage the divisive issue of growth versus environment, the development community
formulated the idea of sustainable development: growth with social protection and natural resource
conservation. Indeed, mining companies argue that economic growth is the very precondition for
solving environmental problems; it generates the resources essential for shaping workable solutions.3
The private sector’s response to calls for sustainable development can be seen in their approach to
corporate social responsibility, namely, the commitment of business to contribute to sustainable
economic development, working with employees and their representatives, their families, the local
community and society at large to improve quality of life, in ways that are both good for business and
good for development.

Whilst most mining companies acknowledge that their business operations have some form of
environmental implications, one of the major issues facing the industry is the ambiguity as to what
constitutes “social responsibility”. Past studies of corporate social responsibility have articulated
many different concepts of responsibility. They have described stages that companies go through as
they mature into socially responsible firms. In technical management terms, social responsibility
requires a specified objective, an operational definition, to guide planning and determine success.
What is clear however is that wherever a mining company operates in the world, it needs to understand
that there are growing expectations from stakeholders about how it should manage its social,
environmental and economic impacts. In response to these growing demands the Global Mining
Initiative, formed in 1998 by nine Chairmen/CEOs of the world’s leading mining and metals
companies tried to articulate how the industry could respond4. Companies who proclaim to be
environmentally aware and corporately responsible have formulated environmental policies into their
mission statements and strategic plans. However, the difficulty lies in implementation; how should
these policies be applied within the range of activities undertaken by the organization. Without
principles to guide such decisions, it is impossible to communicate how corporately responsible efforts
can fit into the broad strategies of the company. It is imperative therefore that those principles should
be constructed to parallel critical decision-making processes and major company activities.5

1
Prepared and written by the Mines and Geosciences Bureau and Colin Legarde Hubo of the University of Asia and the Pacific (2003).
2
See for example the works of Catalino Corpuz, Jr., “Report on the Philippine National Conference on Mining” (May 2002); Oxfam Community Aid Abroad
Mining Ombudsman Annual Report (2002)” www.caa.org.au/campaigns/mining/
3
See the Economist “How many planets: A survey of the global environment”, July 6, 2002.
4
The MMSD Final Report, Breaking New Ground: Mining, Minerals, and Sustainable Development
5
Peter Schwartz and Blair Gibb, When Good Companies Do Bad Things: Responsibility and Risk in an Age of Globalization (Canada: John Wiley and Sons,
Inc., 1999).

1
The Case Studies

The Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources
(DENR) embarked on a project to identify examples of Filipino mining companies that are striving to
conduct their traditional business activities in a socially responsible manner. MGB has identified
three major mining companies operating in the Philippines whose approaches to corporate social
responsibility are examined in this case study: Philex Mining Corporation, Silangan Mindanao
Exploration Company, Inc., and APO Cement Corporation.

The succeeding case studies highlight the CSR practices of these mining firms in seeking to ensure
that the organization achieves a fit with its environment and optimizes its resources to achieve
competitive advantage. It begins by identifying company policy towards corporate social
responsibility. Then it identifies the key elements of this policy broken down into economic, social,
environment, and governance aspects. This is followed by highlighting existing company “best
practice” in CSR, the approach it has taken to achieve its objectives, and the impacts of those practices
both to the company and the community. The final section examines the focus of company’s future
CSR efforts.

The experiences of this small number of mining companies in CSR can help lead the way for the
majority of organizations who are still trying to keep abreast of the developments in new corporate
social responsibility initiatives. It is important that the mining industry in general realizes the
significance of these practices and recognizes the need to communicate the implications for business
and the impact on the environment clearly to its stakeholders, if only to avoid conflict and controversy.

Philex Mining Corporation’s CSR Practices (Padcal Mine, Benguet)

Key Stakeholder Issues:

The communities surrounding Padcal mining operations have voiced their concerns
for stronger community participation to meaningfully represent the community’s
views in the proposed mine decommissioning and rehabilitation plan of the company.
This will be a test case for the company as there is yet no documented mining
community in the country that has developed into a self-reliant political unit at the
post-mining stage. Other stakeholder groups have suspected the company of failing
to ensure that contaminants from the mining or ore processing stages of their
operation would not enter into the surrounding river basins. They argued that for
several years, Padcal mine is a threat to the Agno watersheds, an important source of
agricultural and potable water for lowland residents. In their own words, “we can do
without the mine, but we cannot do without another watershed”.

Located in the southern tip of Baguio City, Padcal Mine covers the municipalities of Tuba and Itogon
in Benguet province. Four Mineral Production and Sharing Agreements (MPSA) with a total area of
14,256 hectares cover the mine, of which only 4% or 570 hectares are utilized for residential and
mining areas. Philex Mining Corporation started its exploration work in the area in 1956, with a
modest deposit of 18 million tons of copper and gold deposits, successive discoveries yielded a total of
260.9 million tons over the next 46 years generating a total of $2.47 billion in foreign currency for the
Philippine Government.6

6
“A gift of God, A work of Man” (Philex Mining Corporation, 2003).

2
The mine used to be a logging area accessible only through a 20-kilometer logging trail. Today,
Padcal mine has become a bustling self-contained community of 16,000 residents of various cultural
background and home to at least four indigenous cultural communities: Ibaloi, Kalanguya, Kankanaey,
and Ilocano. For a generation of these residents, the company has recognized their need for:

(1) Representation and empowerment; and

(2) Sustained livelihood to counter the culture of poverty that ensured the application of short-term
survival logic among them.

Philex Mining Corporation was incorporated in the Philippines in 1955 and listed in the Philippines
Stock Exchange with about 50,000 stockholders. Foreign investors owned at least 27.11% of the
company. A sister company, Philex Gold Inc., is also listed in the Canadian Venture Exchange. The
company has operated for the past 46 years the Sto. Tomas II copper-gold-silver deposit at Padcal,
Tuba, in the province of Benguet. The Padcal mine was the first block cave operation in the Far East.
Philex Gold Inc., on the other hand, operates the Bulawan mine in the province of Negros Occidental.

Over the past years, activist groups have accused the operator of the Padcal Mine with various
environmental and social offenses, including:7

• Padcal mine’s mined-out areas become waste lands;

• Benefits derived from Padcal mine’s operation benefits only the few workers in the mine camp;
• Padcal’s operation encroaches into the lands and communities depriving them of their rights to
tenure and access to the use of natural resources in their own lands; and
• Mine tailings from Padcal mine considered to be toxic and hazardous find their way to the Agno
river system.

The company’s corporate social responsibility policy stems largely from its commitment to address
these issues. As an expression of this commitment, the company formulated a policy statement that
states: “a socially responsible Filipino company striving for excellence in mining”. At the business
operations level, this means:

CSR Area Key Elements

• Incorporate environmental considerations in the project

planning phase and in each activity, be it exploration,
development, construction, extraction or processing;
• Comply with or surpass set environmental laws, rules and
Environment regulations to promote environmental protection and
minimize, if not eliminate, environmental risks; and
• Coordinate closely with contractors, suppliers, government
agencies and other organizations to ensure the safe handling
and proper disposal of all materials, for the protection and
enhancement of the environment.
• Inform local communities of mining plans and programs
through continuous dialogue to promote awareness of safety
Social and environmental policies; and
• Provide adequate resources and essential training to personnel
at all levels to promote awareness and develop skills necessary

7
See for the example the works of Tujan, A. and Guzman, R., Globalizing Philippine Mining, (Ibon Foundation: 2002).

3
 for the implementation of the policy and achievement of its
goals.
Governance • Enhance shareholder’s value and contribute to nation-building.
• Support research work to enhance applicable scientific
Economic knowledge and adopt technologies to improve the safety and
efficiency of mining processes.

From these generally shared elements, Philex’s corporate citizenship policy tends to cluster around
three inter-related components: a commitment to social empowerment, protection of the environment,
and economic efficiency. Its conceptualization of corporate social responsibility advances clear-cut
prescriptions for dealing with natural resource use and community and stakeholder engagement. Thus
the need to protect the environment is inextricably linked to relationship building with impacted
communities, government agencies, people’s organizations and civil society groups.

Local residents are consulted about the environmental and community

development programs of the company.

CSR Best Practice: Community and Stakeholder Engagement.

Philex’s created an inter-departmental coordinating division called the Environment and Community
Relations Division (ECRD) to handle the environmental and community relations of the company. It
is composed of four working groups: Environmental Engineering and Quality Monitoring;
Environmental Enhancement (Forestry); Environmental Sanitation and Beautification; and
Community Development. ECRD only had one main function: to formulate, implement and
recommend changes in policies, procedures and trainings related to environment and community
development. Thus most environmental and community relations policy would be left to ECRD.
Whatever coordination and operation problems that arose could be resolved by the Environmental
Committee (PEC), a sub-committee under the ECRD that actively participates during the conduct of
regular community and environmental inspections and meetings, especially those by the Multi-partite
Monitoring Team (MMT).

4
Following the creation of ERCD, the company pursued a tri-sector approach for community and
stakeholder engagement. It has worked with the following groups:

Business ERCD Representative

• Municipal Government of Tuba and Itogon

• Village Council of Camp 3 and neighboring villages
Government • TESDA
• DECS
• DOH
• Integrated Sewers Association
• Loom Weavers Association
Civil Society • Credit Cooperative
• Community Consumers Cooperative
• Pellmell Irrigators Association
• Informal groups and community leaders

The objectives of the engagement were to:

• Address public perceptions regarding the supposed environmental damage of the mine;
• Educate the stakeholders regarding mine operation in order for them to arrive at informed
decisions;
• Uplift the socio-economic conditions in the host and adjoining communities;
• Provide stable employment for the mine’s over 2,500 full-time employees, the sub-contractors,
and their dependents;
• Train the residents in various skills and aspects of mineral resource development and safety;
• For the dependents, training in alternative livelihood to uplift their economic well-being; and
• For their children, elementary education free of charge and highly subsidized secondary education.

The company provides free elementary education and a heavily

subsidized high school education for the dependents of employees
and for the students from neighboring communities.

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Following the engagement, projects and programs that were successfully implemented include:

• Construction of school buildings within the mine site which has an average enrollment of 5,000
and an operating subsidy from the company amounting to Ph 25 million annually;
• Provision of skills program on cottage industries such as loom weaving, dressmaking, stuff toy
making, jewelry making, food processing, cosmetology, baking, hand-made paper making and bag
making;
• Training for out of school youth on basic industrial skills such as auto-mechanic, welding,
machine shop, carpentry and operation of heavy equipment;
• Upgrading of agricultural and resource-based industries such as livestock, cut flower production,
seedling propagation, tiger grass production, and honey bee production;
• Construction of an irrigation system for the vegetable and fruit farmers of Ligay, Camp 1, Tuba,
Benguet;
• Construction of feeder roads to facilitate the transport of goods, commerce, and services in
Alang/Torree, Ligay, Bas-eg/Pimmingan, Ansagan, and Tapsan;

Feeder roads are constructed to facilitate the transport of goods and

services to neighboring towns and communities.

• Free medical and dental services in the company’s hospital for the host and outlying communities,
including medical and dental missions in the neighboring areas;
• Establishment of livelihood associations for the outlying communities with company assistance in
terms of organization, fund sourcing, and technical and management training;
• Information, education and communication programs that inform communities and residents about
mine exploration and development;
• Reforestation project that has reforested more than 1,500 hectares of denuded lands with an annual
survival rate of trees planted at 86%. Under the “Nursery sa Bawat Bakuran Program”, ECRD has
distributed 500,000 seedlings to host and neighboring communities for propagation. ECRD
provides training and technical assistance and buy-back the seedlings on a later date to help
residents and communities generate additional income;
• Drafting of the post-mining development plan that seeks to minimize the dislocation that may be
caused by the termination of Padcal’s mining operations. The plan spells out the productive use of
the land and facilities after mining operations. Once completed, the plan will again be presented
to the communities and local government units for approval;

6
• Ecological waste management program that involves the sorting out of household wastes within
the mine camp. In 1998, PMC invested in a Materials Recovery Center (MRC) whereby
biodegradable wastes undergo composting process to produce organic fertilizers. An estimated
500 to 700 kilos of high quality fertilizer or compost is produced monthly and being sold to
organic farmers. The non-biodegradable wastes, on the other hand, are further segregated into
recyclable and disposable materials. The recyclable materials are sold to numerous recycling
centers while the disposable wastes are brought to a controlled waste dump; and
• ISO 14001 Environment Management System Certified.

Left: The company conducts medical and dental missions to host and outlying communities.
Right: Mr. Gerard Brimo, Chairman of Philex, receives the company’s ISO 14001 Environment Management System Certificate.

Impacts of Stakeholder and Community Engagement

Impacts of the stakeholder engagement include both business benefits and development impacts.

Business Benefits8 Development Benefits

• Through community integration and • Annual incomes of residents, employee

immersion of company personnel, the dependents, and communities have
company had organizational increased significantly.
representation in the host and • Increased awareness and participation
neighboring communities. of local groups and local government
• The company had a “face” in the units in company decision-making that
community that was instrumental in affects their livelihood and
shaping the options and behavior of local communities.
leaders, community organizations, • Recognition of workers right to
sectoral groups, and individuals for organize and to collective bargaining.
cooperation and support of company • Increased local autonomy with the
projects. setting-up of local government units
• Immediately dealt with macro and micro extension offices within the mine camp
issues and established the credibility of and neighboring communities.

8
The advantages of CSR has been discussed extensively by ECRD manager Victor Francisco in a paper entitled “Building Community Partnership: The
Processes Involved and the Advantages of Starting Early”, at the Mining Philippines 2001 Conference held in Manila on November 21-22, 2001.

7
 the company within the host and • Development of downstream industries
neighboring communities. as a result of livelihood and skills
• Managed the perception regarding the enhancement training programs.
company and created impressions that • Decreasing crime rates due to available
led to enhance company’s sphere of employment opportunities for those
influence. who are unemployed and out-of-school
• Detection of threats and discontinuities youth.
(e.g. anti-project groups) through early • Credit extension due to the
scanning and monitoring of the social organization of development
and physical environment. cooperatives, which now has a total
• Accurate information is obtained which asset of 192 million extending
is needed by company executives to productive and provident loans to all
make the right decisions. its members.
• Contributed enormously to the ISO • Increased environmental awareness
14001 certification of the company that and shared responsibility on the part of
recognizes its environment friendly the communities and company in
production processes, the first ever protecting watershed and forest areas.
company in the metal industry to be • Democratization of resource access
awarded such a certification. rights and the encouragement of
• Continuous improvement in the safety people’s participation in resource
performance of the mine because of management decisions.
highly motivated labor force. • Adoption of community-based
resource management approaches (for
protecting the lowland/upland resource
base and conserving biodiversity while
providing sustainable livelihood
opportunities).
• Encouragement of environmental
information, education and
communication activities which
heightened environmental awareness
and understanding as well as assisted
in the formation of environment-
friendly values for developing
sustainable development ethic (e.g.
stewardship).
• Local government units marshalling
the necessary political will for
translating social and environmental
development agenda into reality.

Efforts at developing the impacted communities have been recognized by various government
agencies and the United Nations when it awarded Barangay Camp 3 community, which comprise
largely of the Padcal mine and the mine community, as one of the “50 Model Communities in the
World in 1995”. Other citations and awards include:

• “Safest Block cave Mining Operation” by the Philippine Mine Safety Association (mine safety
and health category);

8
• Presidential Trophy for “Best Mining Forest” for its reforestation efforts;
• HAMIS (Health and Management Information System) award of the Department of Health and
the German Agency for Technical Cooperation (GTZED) for its Integrated Community Family
Welfare Program;
• “Most Outstanding Firms with Family Welfare Program” by the Department of Labor and
Employment;
• Presidential Mineral Industry Environmental award by the Department of Environment and
Natural Resources (DENR); and
• Presidential Award for Heroism in recognition of the company’s assistance made during the
1990 earthquake in Baguio City.

“We do our best to institutionalize and be proactive in our environmental management. The company
believes that in the event of a disaster, the mine will not only be the one affected but, more
importantly, the countless communities and residents who have sustained and supported us over the
year. We owe it to them”

-says Victor Francisco, manager of the Environment and Community Development Technical Services
Group.

Future CSR Efforts: Mechanics for Post-Mine Development Stakeholder Engagement.

Given the direction taken by the company in community relations in recent years, there are numerous
opportunities for them to expand into other CSR areas. For the most part, however, the company is
focusing its efforts to the mine transition plan slated for Padcal Mine in 2015. The company is
continually working on expanding its corporate social responsibility activities within the framework of
engagement:

• Mechanics for institutionalizing local autonomy to meet the demands of social development
programs stated within the mine transition plan. This will enable the local government to respond
to the needs of their constituents directly while the company may give logistical support to the
local government units after the life-of-the mine.
• Process of institutionalization of village-level development planning, to make the people in the
community accept the responsibility of improving the well being of the community after the life-
of-the-mine.
• Corollary to this process is the development of community-based programs and projects rather
than community-oriented programs. The former is built from “ground-up” thereby increasing the
chances for self-governing, self-sustaining, and self-reliant initiatives.
• Establishment of linkages with project actors (i.e. the political leadership at the provincial,
municipal, and barangay levels, line agencies – public or private – and program beneficiaries).
• Provision of funding support for training, implementation and assessment of social development
services and programs in host and neighboring communities, particularly those affecting health,
education, and housing.
• Information and communication that are within reach of company stakeholders and that emphasize
on self-reliance at the community level through the transfer of knowledge, skills and technology to
the community.
• Delivery systems among sources of inputs and services and the recipients of social services.

9
In the final analysis, the implementation of the mine transition plan depended on the formation of
grassroots development coalitions of both the impacted and neighboring communities. The
composition of those coalitions hinged on the disposition of the local municipal governments to such
plan, the involvement of the grassroots sectors, and the extent of community organization. Thus,
barring opposition from other stakeholders, the engagement process in the transition plan will depend
on the existence of a coalition of organized communities, non-government organizations, government
actors and support from the national government agencies.

Silangan Mindanao Exploration Company’s CSR Practices (Boyongan

Exploration, Surigao del Norte)

Key Stakeholder Issues

Since September 1995, when 12 people were buried, when a waste pond operated by a
different mining company collapsed in Placer, Surigao del Norte, various exploration
works in the province met opposition from local government units and NGOs. Some
mining companies have been accused of manipulating community people by
employing divide-and-rule tactics and of lacking in transparency. In 1999, an
exploration permit was issued to Silangan Mindanao Exploration Company Inc., a
joint venture project of Philex Gold Phils. Inc., and Anglo-American Exploration
Phils., Inc. to conduct exploration works in Tubod, Surigao del Norte,

The St. Peter Catholic Parish priest is working to have exploration permits cancelled.
The priest is concerned about the social effects of mining on the residents and has
quoted the Catholic Bishops Conference of the Philippines (CBCP) Statement of
Concern on Mining regarding its so-called devastating effects. Past mining
experiences in the country, including knowledge of past mining practices in the
locality, make the priest and the community suspicious and vigilant of the company.

In the three years since exploration began in 1999 in Boyongan, Surigao del Norte, Silangan
Mindanao company have succeeded in projecting a “good neighbor” and “we care image” among the
residents of host communities and implemented projects that can be described as “pioneering” for
exploration companies. Specifically, they have demonstrated sound environmental management
practices and sincere social development initiatives including livelihood projects for the unemployed
in the area.

The project, located within the Parcel 2 area, under the jurisdiction of Barangay Timamana,
Municipality of Tubod, is about 30 kilometers south of Surigao City. It aims to explore the area for
copper and gold. Exploration activities consist of geologic mapping, geo-chemical surveys, geo-
physical surveys and drilling. The impacted communities are largely agricultural with a total
population of about 2000 households. A survey conducted by the company yielded some useful
indicators:

• High unemployment rate in the area

• Educational facilities need repair and maintenance
• Village roads need improvement
• Poor waste management

10
• Low business opportunities
• Poor water system infrastructure
• Aside from farming, majority of the community members have no alternative source of livelihood

Silangan Mindanao Exploration Company Inc. is a joint venture between Philex Gold Phils., Inc. and
Anglo American Exploration Philippines, Inc. Philex Gold Phils., Inc. is a wholly owned subsidiary of
Philex Gold Inc. (PGI). PGI is listed in the Canadian Ventures Exchange since 1996 and has been
interested in exploration projects around the Philippines. PGI is 81% owned by Philex Mining
Corporation. On the other hand, its partner company, Anglo American Exploration Phils., Inc. is a
wholly owned subsidiary of Anglo American PLC, which is the world’s largest non-energy natural
resources company. It is the world’s largest producer of platinum, diamonds, gold and a major
producer of base metals. Anglo American is 36% publicly owned and listed in the UK, Switzerland,
and South African Stock Exchanges. Its market capitalization is over US$15.6 billion.

The joint venture between Philex and Anglo was entered into in 1999 through the creation of Silangan
Mindanao Exploration Company for Surigao Del Norte Mineral Production Sharing Agreement
(MPSA) Nos. 148 and 149-99-XIII, which were granted on December 29, 1999. Formal exploration
activities in Surigao started in July 2000 up to the present.

Not long ago, the province of Surigao has been the site of some of the worst excesses in mining,
among them:

• November 20, 1995 – coal mine explosion claimed the lives of thirteen workers in Bislig, Surigao
del Sur;
• April 26, 1999 – tailing spill from a damaged concrete pipe of a different mining company buried
17 homes and swamped 51 hectares of Riceland in Surigao del Norte; and
• September 2000 - protests erupted over the impending exploration project of another mining
company in the nearby Placer municipality.

Overall, the company inherited these excesses and they decided to do something about it to head off
unrest by those whose lives have been negatively affected by mining. The initial emphasis on
managing the environment and the need for a sincere and empowering community development
program reflect this concern.

The company’s approach to corporate social responsibility speaks of a commitment “to sustain a
progressive labor-manager relationship and maintain safety in the workplace; while upholding at all
times a sound environmental policy and fulfilling our obligations to the community as a responsible
corporate citizen”. In order to give practical expression to this commitment, the company has
formulated the following corporate social and environmental objectives:

CSR Area Key Elements

• Conserve environmental resources by incorporating

environmental protection and rehabilitation during the planning
Environment stage and project implementation.
• Strictly comply with standards set by the government on
environmental laws, rules and regulations in order to minimize
environmental disturbance if not to totally eliminate.
• Support and actively participate with any research work

11
 conducted by any agency for the diverse stewardship of flora
and fauna in the locality.
Economic • Provide superior returns for the community and shareholders in
a socially and environmentally responsible manner.
• Inform and consult partner communities through the local
Governance government units and various sectors concerning company’s
plans and programs.
• Promote and maintain harmonious understanding with the
partner communities and other stakeholders in the management
of community-based resources towards self-reliance.
• Perform aggressive but prudent exploration, extraction, and
Social utilization of the available mineral resources with due
considerations and respect to the culture and heritage of the
local communities.

CSR Best Practice: Social Impact Assessment and Management

In the communities surrounding the exploration site, the company’s social responsibility has come in
various forms. The company administers an integrated program of assistance that strives to empower
communities to become self-reliant and participate productively in their own development. The
decision to encourage communities as partners was anchored on assessing and managing key issues
related to:

• Support of community residents (informal basis e.g. during neighborhood assembly/discussion) of

the project is critical due to some anti-mining sentiments within and in neighboring municipalities;
• Developing fair compensation systems for land disturbance and rehabilitation activities;
• Obtaining information that may help protect and maintain the operation’s physical infrastructures
(especially that insurgent groups have been known to be active in the area); and
• Changing public mindset that an exploration project is not as environmentally disruptive as they
believed because of the use of best mining environmental management practices.

Water improvement system project in Barangay San Isidro assisted by

members of the Community Technical Working Group (CTWG).

Working through its community relations arm, the company full-heartedly supported the creation of
the Community Technical Working Group (CTWG) as recommended and initiated by the Mines and

12
Geosciences Bureau Region 13-CARAGA. The CTWG is an environment and social impact
assessment team that allows the active and meaningful participation of the communities in monitoring
and improving the company’s environmental management and community development program. The
CTWG is a multi-partite monitoring team that serves as a vehicle for civil society groups, local
government units, and the company to explore “effective critical involvement and collaboration
strategies in the achievement of a self-reliant community by way of the application of appropriate
management and community-based resources in harmony with environmental protection and
rehabilitation”.9

The main objective of the CTWG-Boyongan as expressed in the Memorandum of Agreement (MOA)
is:

“To verify issues and complaints of the community about environmental disturbance and other social
concerns regarding exploration activities and to ensure that appropriate mitigating and community
development measures have been observed and put in place by the Silangan Mindanao Exploration
Company, Inc. for the protection and enhancement of the environment and surrounding communities”

At present, the CTWG-Boyongan is composed of:

• MGB 13 Regional Director

• DENR-PENRO Surigao del Norte Representative
• Silangan Mindanao Mining Representative
• Tubod Municipal Mayor
• Barangay Chairmen of Timamana and San Isidro
• Principal of Timamana National High School
• President of WATSAN
• Chairman of SILKA
• Priest of Philippine Independent Church
• Church Elder of Seventh Day Adventist Church
• Deacon of Baptist Church

The responsibilities of the CTWG-Boyongan include:

• Monitoring of active and abandoned drilling sites in terms of (1) rehabilitation done in the area;
(2) siltation control measures; (3) handling of used and unused oil; and (4) measures undertaken to
protect vegetation around the drilling sites;
• Monitoring of surface and ground water: ground water samples taken from the main source and
samples for surface water are taken to an independent laboratory for testing;
• Conducts social development diagnosis through community “pulong-pulong” and recommends
other community development activities;
• Recommend livelihood projects and extend assistance to enhance capacity-building of people’s
organizations;
• Recommend assistance for the improvement of community infrastructure such as water systems,
roads, churches, schools, sports facilities and other government buildings;

9
The CTWG has been proposed as a possible area for study under the Government-Facilitated Business Community Relations project of the United Nations
Development Program (UNDP). The study will attempt to develop a preliminary analysis of the manner and extent in which government intervenes in business
community relations in the Philippines and facilitates the evolution of these relationships into partnerships.

13
Left: Scholars of the company get free elementary education and other assistance from the company.
Right: Silangan Exploration Inc. donates computer facilities to schools in the community.

• The training and transfer of basic technical knowledge in environmental protection and
rehabilitation, including health and safety; and
• The conduct of an ICE program to inform the impacted communities of the truth about the
company’s exploration activities, environmental management practices and community
development program.

Silangan’s CSR strategies in social development and environmental management are anchored on a
framework that interlinks three major components of: organizational development, active and
meaningful community participation and self-reliance:

First, the meaningful involvement of the impacted communities for example was crucial in harnessing
their own capacity for self-development. The rationale was to make the residents know that it is their
right to actively participate in activities that will affect their lives and that their own development can
be harnessed through concerted effort. Problem identification and the planning of solutions are
therefore being done by the communities themselves. It was assumed that social assessment and
management would be more effective if communities acquired such a sense of “ownership”. Critical
aspects of the assessment and project implementation were therefore not relegated to the effective
control of company people.

A community livelihood project receives assistance from the company.

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Second, imparting entrepreneurial skills and provision of seed capital for engaging in small-scale
livelihood projects using a modified approach. For some community programs, a livelihood project
became an end in itself but, in the case of the company’s Community Development Program,
emphasis on livelihood as a way to help emancipate the residents from conditions of poverty was
equalized with sectoral coaching to advance social and environmental consciousness by highlighting
the correlation between environmental conservation or the proper use of natural resources and
community development.

One of the company’s pulong-pulong with community members.

Third, the creation of organizational forums (pulong-pulong) in impacted communities and among
social sectors became a pivotal factor in making the residents aware of the positive and negative
effects of the exploration and possible mining project.

15
 Division of Roles and Responsibilities in CTWG

Roles/Responsibilities

DENR-MGB 13 • Act as team leader of the Group.

• Prepare and submit reports address to the MGB-Region 13 Regional Director
and agencies concerned.
• Act as the secretariat of the Group.
DENR-PENRO • Collect water samples for analysis to the pre-identified areas in the presence
of CTWG members.
• Expedite the immediate analysis of water samples.
• Act as assistant team leader of the Group.
• Review and sign CTWG reports submitted to MGB Region 13 and agencies
concerned.
• Recommend measures that can further improve the implementation of the
Environment and Community Development Program.
Municipal Government • Designate Sanggunian Bayan member who is the chairman for Environment,
of Tubod Health/ Municipal Health Officer and Municipal Agrarian Officer as regular
member of the CWTG.
• Participate and act as witness during the monitoring of the drilling site, during
the collection of water samples for analysis, and implementation of the social
development programs.
• Review and sign CTWG reports submitted to MGB Region 13 and agencies
concerned.
• Recommend measures that can further improve the implementation of the
Environment and Community Development Program.
Community LGUs • Designate Kagawad member who are chairman for Environment and Health,
(Brgy. Timamana, San Sanggunian Kabataan Chairman and School Principal as regular members of
Isidro and Timamana the CTWG.
National High School) • Participate and act as witness during the monitoring of the drilling sites, during
the collection of water samples for analysis, and implementation of the social
development programs.
• Review and sign CTWG reports submitted to MGB Region 13 and agencies
concerned.
• Recommend measures that can further improve the implementation of the
Environment and Community Development Program.
NGO/PO (Watsan, • Participate and act as witness during the monitoring of the drilling sites, during
Silka, PIC, Seventh the collection of water samples for analysis, and implementation of the social
Day Adventist, Baptist development programs.
Church) • Review and sign CTWG reports submitted to MGB Region 13 and agencies
concerned.
• Recommend measures that can further improve the implementation of the
Environment and Community Development Program.
Silangan Mindanao • Assist the CTWG during the implementation of the MOA.
Mining Co. Inc. • Responsible in the expenses incurred in water analysis and materials
including logistics support to all CTWG activities.
• Sign the CTWG reports submitted to the MGB Regional Director and agencies
concerned.
• Act on the agreed upon recommendation of the CTWG for the improvement of
the Environment and Community Development Program.

Outcome of Social Impact Assessment and Management

Three years after the institutionalization of CTWG, the benefits have been very encouraging both for
the company and host communities.

• With the positive response of impacted communities to the

CTWG, the company was able to get a favorable endorsement
from the village councils of Timamana and San Isidro. The
municipal council, whose members were initially against the
exploration project, subsequently passed a resolution paving
Company Benefits the way for the company to proceed with its ongoing program

16
 • With the positive response of impacted communities to the
CTWG, the company was able to get a favorable endorsement
from the village councils of Timamana and San Isidro. The
municipal council, whose members were initially against the
exploration project, subsequently passed a resolution paving
Company Benefits the way for the company to proceed with its ongoing program
of work.
• As result of regular consultations with impacted residents as
stipulated in the CTWG, the potential for conflicts over access,
land use and rehabilitation have been reduced, thus preventing
costly delays especially in the detailed or drilling stage.
• By earning the trust of the impacted residents, the company
was able to maintain its “license to operate” and the prospect
of future exploration concessions has been partly secured.
• Contributed to the empowerment of local groups, with a clear
preference for grassroots organizations.
• Helped ensure the viability of the biophysical and human
resource bases for development and the structures that sustain
Community Benefits them.
• Stimulated tri-partite partnerships among local government
units, community, and government agencies and identified
areas where coordination and collaboration can take place.
• Encouraged new form of “engagement” whereby stakeholders
can participate constructively in the crafting of sustainable
strategies for exploration activities.

“One of the most important aims of SMECI is to operate and be accepted as an

environmentally and social responsible exploration company. Mutual understanding and
partnership can attain this aim with the host communities. The company endorses the view
that sustainable development requires the enhancement of economic and social opportunities
while at the same time preventing irreversible degradation of the natural environment,”

-says Patrick Waters, President-Exploration Manager of Anglo American Exploration (Phils.)

The CTWG has helped won for the company the Presidential Mineral Industry Achievement Award in
2002 for its outstanding levels of dedication, initiative and innovation in the pursuit of excellence in
environmental management. Also, it is worthy to mention that CTWG has paid off especially in
minimizing political risk in areas where anti-mining sentiments have been traditionally high. This was
made possible in the shift of orientation towards impacted communities: from “project beneficiaries”
to “community partners”.

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 FROM “BENEFICIARIES” TO “PARTNERS”

Comprehensive and Process-

Piecemeal and staggered oriented approach

Data gathering, analysis and

Data gathering and processing of insights by
analysis by External affected communities and
Groups groups

Evaluation conducted Evaluation conducted by and for

mainly for impacted the affected community and
community groups

Stressing government
structure and Encouraging and accepting
instrumentalities as innovative community-based
major elements of approaches and mechanisms
sustainability

Future CSR Efforts: Strengthening of Social Monitoring Systems

Managing and sustaining the CTWG is one of the more challenging tasks ahead of the Boyongan
project. All project actors must have a stake in and own the initiative at least partially. Instruments
like permanent leveling off, identifying and adjusting roles and functions, teambuilding workshops
and regular consultations for sharing information are essential. Just as local institutions and affected
communities play critical roles in CTWG, in assessing their roles, the company believes that efforts
must be exerted to address the following needs:

• to clarify and delineate the relationships among the various institutions involve in the CTWG;
• to strengthen the absorptive capacity of such groups as well as their administrative capability after
they have been given greater role in decision making;
• to establish linkages with other actors across municipal and regional boundaries;
• to strengthen the “learning process” for building local action and mobilization; and
• to further develop, strengthen, and institutionalize mechanisms for community participation (and
access) in the various phases of a sustainable development activity.

“The credibility of a mining company hinges on its past operations. There are existing
initiatives that encourage participation but these are very limited. There is a need to expand
these activities to include educating the stakeholders on the grave environmental mistakes
committed by mining companies in the past,” maintains Father Lauro Muzo of the St. Peter
Catholic Church in Tubod, Surigao del Norte.

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APO Cement Corporation’s CSR Practices (Naga, Cebu)
Key Stakeholder Issues:

Prior to 1999, residents used to refer to the huge decrepit structure of the cement plant
of APO Cement Corporation lying alongside the national highway in Naga, Cebu as a
‘monstrous blight’. Community residents also felt that historically, nothing had been
done to prevent water and air contamination from the cement plant. In 1999, the
company began to address some of the environmental concerns of the residents. Since
then stakeholders attention has shifted towards the labour practices of its new owners.
They pointed out that the company has resorted to downsizing and retrenchment of
workers instead of the promise of more jobs. Hundreds of workers that used to be
employed in the cement plant have been displaced due to upgrading and
mechanization. The majority of those who work in the plant are ”contractuals” who
are paid the minimum wage equivalent to US$5/day and are not entitled to the rights
and benefits of regular workers. Today, this scheme remains a fluid and contentious
issue between the company and its stakeholders.

Today, more than ever, companies have to contend with a vigilant public ready to scrutinize the social
impacts of their operations. Events have shown that corporate failure to heed mounting public
pressures will result in negative consequences ranging from loss of potential long-term profits and
commercial viability. Unlike in the past, a stringent market climate now exists, which forces
companies to consider and declare their position on such issues as community relations and
stakeholders’ accountability.

APO Cement Corporation rehabilitated, developed and introduced new technology to an old cement
plant, and in reflection of a company conscious of its social responsibilities, managed to earn the trust
and respect of its stakeholders in the process. One of the oldest cement plants in the country, the plant
facilities located in Brgy. Tina-an, Naga, Cebu traces its beginning in 1921 when the Cebu Portland
Cement Company was formed, incorporated and owned by the Philippine government. The cement
plant has an annual production capacity of 3 million metric tons.

APO Cement Corporation is a member of the CEMEX Philippines Group of Companies (composed of
Philippine companies affiliated or associated with CEMEX S.A. de C.V., one of the three largest
cement companies in the world, with approximately 81 million metric tons of annual production
capacity). CEMEX has operations in 30 countries and trade relations with more than 60 countries
around the globe. In 1997, CEMEX entered Asia, through the Philippines, by acquiring a stake in
Rizal Cement Company. In 1999, another affiliate of CEMEX acquired a stake in APO Cement
Corporation. In 2000, APO Cement Corporation received its ISO 9002 and 14001 certifications
respectively.

19
 APO conducts environmental protection and enhancement program through
tree planting projects.

The company considers its social responsibility as more than just giving donations and grants. The
company believes that it should “operate our plants and facilities in a manner that preserves the
environment and protects the health and safety of our employees and the public”. This commitment
finds expression of its corporate social responsibility in the following policy statements:

CSR Area Key Elements

• We shall be the leader in the industry by continuous improvement
in the quality of our product. This will be accomplished through
Economic research and development, process improvements and technology
upgrading. Product availability to our customers will be assured
through an improved and expanding distribution network.
Affordability of products will be maintained through an effective
cost reduction program.
• We manifest our commitment to the protection of the environment
by actively responding to environmental concerns at all times
within a framework that balances economic and social
considerations.
Environment • Pollution prevention, enhancement of the environment and
continual improvement in our environmental performance are the
fundamental premises of our company’s business.
• APO Cement Corporation is committed to comply with all legal
requirements and to implement programs and procedures to ensure
compliance and pursue sustainable development.
• Make efficient use of natural resource and energy and actively
pursue residue and emissions reduction.
• We consider our human resources as the most valuable asset in the
organization. We shall provide our employees an environment

20
 conducive to their development and continuous professional
improvement, with opportunities for growth within the
organization. In maximizing the capabilities of our staff, we will
ensure the successful attainment of company goals.
Social • Maintain a proactive attitude, going beyond the industrial activity
by means of far-reaching actions fostering conservation and
responsibility towards the environment, industrial safety and
health.
• Adopt and enforce internal standards that will ensure on-going
improvement even in venues where laws and regulations are in the
development stage.
• Maintain effective communication channels with employees and
the community.
Governance • Provide maximum benefits to our shareholders.

CSR Best Practice: Social Investment

As a concrete manifestation of the APO Cement’s commitment to corporate social responsibility, the
CEMEX with a Heart Program was created to handle the company’s corporate giving and community
development projects. The program aims to “aid in the development and upliftment of the
communities in which it is present”. Its core philosophy is expressed as:

• a company that cares for health, safety and the environment;

• a company that treats its communities as family;
• a company that believes in the potential of the youth; and
• a company that is the government’s partner in nation building.

Company employees train in rescue operations in a fire safety drill.

21
The company’s decision to institutionalize the program was highlighted by several objectives:

• to manage the environmental impacts of its operations because of the growing awareness on the
part of community residents to enhance and protect the surrounding environment;
• to reduce political risks due to the unwillingness of the barangay captain (village political leader)
and the local parish priest to work together with the company;
• to convince local NGO groups that the company is complying with environmental regulation
especially those related to dust emission and control; and
• to reduce the risk to production since the reorganization after the buy-in has displaced workers
especially those in the stevedoring section causing dissension and resistance.

The CEMEX with a Heart Program was implemented with the active participation of the various
departments of the company in close coordination with the Corporate Communications group who
initiated the process of consultation with the residents, local political leaders and people’s
organizations within the area. A series of house visitations and individual interviews became regular
activities that led to the formation and cooperation of various groups:

• APO Cement Ladies Club

• Naga National High School
• Naga Municipal Government
• Philippine Business for Social Progress (PBSP)
• Tina-an Barangay government
• Parent-Teacher-Community Association (PTCA)
• Tina-an Environmental Management Association
• Tina-an Catholic Parish

Naga National High School, one of the company’s Adopt-A-School projects, receives
a school building for computer training.

22
 The process of assigning roles and building of agreements soon followed that culminated in the
signing of Memorandum of Agreements (MOAs). The agreements stipulated the responsibilities of
each of the participating parties as well as their contribution in the monitoring and evaluation of
projects. After the signing of MOAs, a scanning and search for projects was conducted. The final
selection of projects was made on the basis of: (a) the residents overwhelming support as indicated
from their responses during the house visitations and interviews, (b) the project’s demonstration of
sustainability, and c) the project features an element which is new in the local setting. Among those
projects selected and implemented within months of the signing of MOAs were:

• Construction of a Day Care Center within the plant’s communities that prepare children from ages
3 to 6 years for their elementary education;
• Vocational, technical and livelihood training for the out-of-school youth in host and neighboring
communities
• Environmental IEC in local communities that resulted in projects related to tree planting,
recycling, and waste management project, animal breeding and preservation;
• Medical missions that were conducted monthly to serve the dental and medical needs of the
communities; and
• Rehabilitation of St. Joseph the Worker Chapel to strengthen spiritual awareness among the
workers and residents of the community.

Left: A Day Care Center was constructed within the community to prepare the children for their elementary education.
Right: St. Joseph the Worker Chapel receives assistance from the company for its rehabilitation project.

Of note is the company’s Adopt-A-School project wherein the company donated computer and
computer accessories to the Naga National High School, and has constructed a school building for
computer training. The vision of the project was clearly expressed in the MOA:

“To provide and intensify Information Technology training in public schools and prepare students for
the jobs of the future.”

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 DIVISION OF ROLES IN THE ADOPT-A-SCHOOL PROJECT
APO Cement
As partner in the educational development of the community,
provided NNHS with 10 units of brand-new desktop computers
as a form of assistance to ensure that the implementation of the
COMPANY project in the school is sustained.
Provided volunteer employees to teach the students in basic
computer literacy.
Municipal Government of Naga
Provided 1 unit aircon as a form of assistance to the
implementation of the project.
Naga National High School
Assigned a teacher, who possesses basic knowledge of
computers to undergo training on the use of IT for instruction,
GOVERNMENT and implement the computer training curriculum prescribed by
the task force on PC’s for Public High Schools.
Provided suitable accommodation for 10 units of computers
and guaranteed the exercise of outmost care in using them.
Implemented the curriculum for computer literacy and its use as
a tool for teaching-learning process.
Ensured the maintenance of computer units.
Made arrangements with other local and private
institutions/organizations or educational stakeholders for the
solicitation of funds and other forms of assistance for the
operation of the project.
Provided the task force on PC’s for Public High Schools a
quarterly status of the project including a guarantee on the
maximum utilization of the computers as a tool for teaching-
learning process.
NNHS-Parent Teacher Community Association
Provided 1 unit printer, 10 computer tables, 21 monoblock
chairs, electrical and lighting requirements and appropriation
CIVIL SOCIETY for maintenance.

Philippine Business for Social Progress (PBSP)

Directly implemented the project including its regular
monitoring, submission of mid-year and annual report and
photo documentation.

Comparison of the company social investment projects suggests three common elements: the cohesive
factor, feeling of ownership, and commitment to group goals.

• Cohesive Factor: A shared feeling to engage in a productive service already existed on the part
of local groups and communities. The company was able to take advantage of this factor to bring
all the stakeholders together within the community to achieve a common goal.

• Commitment to Group Goals: The presence of an innovator or a strong leader has been very
evident in the success of the projects. By working through this community leaders, the company

24
 was able to elicit the support of the whole community since the project was initiated by somebody
who is perceived as “one of the community members”.

• Feeling of Ownership: The mode and structure of the projects arose from the communities’ own
perception of their needs and problems. The participatory approach employed by the company
ensured that the project they plan for the community matches their felt needs. Thus, the modalities
used by the company have increased local ownership of projects including:

- Resource inventory by local groups;

- Consultation with local political and religious leaders;
- Interview of local residents;
- Community consultation meeting;
- Participant observation;
- Petition initiated by the local group; and
- Self-help projects initiated and completed by local community;

Impacts of Social Investment

Almost three (3) years after starting the process, the investment yielded substantial achievements.

• Company operations went ahead without encountering delays

due to the absence of opposition from local groups.
• Barangay (village) captain and the local parish priest have
become active partners of the company in implementing
Company Benefits projects both for the community and the company.
• Smooth transition in sourcing-out/contracting of stevedoring
services.
• Company awarded with ISO 9002, 14001 and 17025 due to its
quality and environmental management programs as well as
laboratory competence partly ensured through stakeholders
active participation.
• Promoted workers loyalty and lessened the probability of a
worker’s strike.
• Skills training raised the economic status of community
residents and gave workers an alternative source of livelihood
other than the cement plant.
Community benefits • Widened the options of individual households in economic
endeavors especially those members of the ladies club. The
benefits they received also extend to the communities wherein
much needed economic turnaround is obtained.
• Access to and control of resources by the residents increased
their potential for “risk-sharing” in the implementation of
company projects directed to the communit.

APO Cement’s numerous awards and citations demonstrate the company’s commitment to social and
environmental goals. Among them:

25
 • DENR Environment Month Award – in recognition of the company’s eco-friendly
operation and for being the first plant in Region 7 (Cebu) to have achieved both ISO
9002 and 14001 certifications;
• Presidential Mineral Industry Environment Award (PMIEA) in 2001 – given by the
president of the Republic of the Philippines for the company’s exceptional
environmental performance in the industry;
• Citation from the Provincial Board of Cebu for the company’s efforts in upgrading the
quality of public education;
• Citation to APO Ladies Club from the Provincial Board of Cebu for “their community
relations projects, specifically, the Waste Management Awareness Campaign”; and
• ANVIL Merit Award for Environment Protection.

Future CSR Efforts: Developing Stakeholder Performance Evaluation System

The substantive work done by the company in providing for the framework in social investment will
be pursued with renewed vigor in the succeeding years. However, this early the company is working
towards developing a performance evaluation system for stakeholder participation within the CEMEX
with a Heart Program. The company realizes that a minimum condition must exist before any
investment can be initiated towards a mutually acceptable solution. This minimum condition may take
the form of a shared commitment on the part of the local community/local government to engage in a
productive service. If unwillingness on their part is a constraint, the flow of information as well as
incentives for mobilizing support will be hampered. Also, the company believes that the evaluation
system can help drive the investment process to be result-driven rather than activity-focused. Thus,
objectives and systems to measure the progress and diagnose problems have to be clear and
appropriately installed. Likewise, the role of participating agencies and groups have to be defined well
in keeping with the principle of “burden sharing” underlying the goal of company social investment
program.

“CEMEX Philippines is deeply committed to the development of the communities in which it is

present and even more so, to the youth in these communities who we know will become our
country’s future leaders. With the support of parent, teachers and government, we hope that this
building, like our other community-related programs, will inspire the youth to seek out and make a
better future for himself, his community and his country,”

-says Ms. Juris Umali-Soliman, corporate communications director of CEMEX

26