Trouble in a mineralogical paradise

In late December 2010 a spokesman for the National Democratic Front (NDF), a confederation that encompasses many of the Philippines’ leftist groups – including the Communist Party of the Philippines (CPP) and its New People’s Army (NPA) military wing – warned that it intended to increase the tempo of attacks against mining companies.

The rationale for this threat was that mining companies damaged the environment, disturbed local communities, engaged in unfair labour practices and only benefited a narrow elite. 

While the immediate threat appeared directed at mining operations in northeast Mindanao’s Caraga region – comprising the provinces of Agusan del Norte, Agusan del Sur, Surigao del Norte and Surigao del Sur – it is evident miners could also be targeted in most areas of the country where they are active.

Two obvious questions arise from the mining sector’s perspective: are such threats credible and, if so, what impact could they have on present and future operations?

The context of the threats offers some comfort. The NDF statement coincided with the 42nd anniversary of the start of the present communist insurgency, launched in December 1968. The NDF has declared mining as “detrimental to the interests of the people” in both 2007 and 2008, without markedly increasing the tempo of its attacks against mine sites or infrastructure.

The official view of the threat is that it simply represents the annual demand for so-called “revolutionary” or “war” taxes extorted by the CPP/NPA on wide range of business and commercial interests throughout the country. While the communists’ prefer the term “fines,” no one disputes that large sums of money are collected by the CPP/NPA in exchange for permitting companies to operate in areas where their interests can be readily disrupted by force if they fail to comply.

According to the Armed Forces of the Philippines (AFP), the NPA extorted US$2.17 million between January and November 2010 from a variety of businesses, almost US$1 million less than 2009’s US$3.1 million. Such figures are indicative rather than definitive, however, given their source and because many companies fail to report whether and how much they have paid the communists.   

It also points towards how the insurgency may be assessed as a threat to foreign and local business interests as the data, on both sides, is highly politicized and intended to serve a competing agenda. For example, the AFP announced at the end of 2010 that it had further reduced the strength of the NPA in line with, though failing to meet, targets established at the year’s start.

The importance of such metrics within bureaucracies, particularly in such often random and uncontrolled areas as armed conflict, often overwhelms ground realities, as it often serves as the only measure of progress or success. Nevertheless, and in the absence of any other independent or credible information, even such tainted data does serve a purpose if only by illuminating the gap between aspiration and compromise. This is evident in the latest AFP estimates on NPA strength.

According to the military, the NPA by the end of 2010 was at an “historic low” of 4,111 members, down from 4,702 at the end of 2009 and against the group’s peak strength of around 25,000 members in the 1980s. The AFP claimed to have dismantled three guerrilla fronts in 2010, reducing the fighting fronts of the NPA rebels to 48 from 51. The final figure is the most revealing as it points to a dramatic reduction in the campaign to close down NPA fronts.

This may reflect internal military and national politics following the mid-year elections and greater emphasis on once again reaching an accord with the communist insurgents. It may also correspond with the recognition that the remaining fronts are well-entrenched in local communities and will be difficult to dislodge without creating even greater opposition to the national government and its agencies.  

NPA capabilities

The NPA has demonstrated a sustained capability to attack or otherwise disrupt mining operations in key regions of the Philippines, both through the use of force and “softer” options capitalizing on peaceful local opposition to projects and their related infrastructure. However, measuring capability over motive is far more problematical and relies to a great extent on analysis rather than data.

As the list of attacks (below) illustrates, the NPA has shown its ability to mount often sophisticated and multi-objective attacks against mining property and personnel, as well as military and police assets deployed to protect these sites. While such raids do lead to casualties among mining and security personnel, the relatively low numbers suggest this is not a priority, and may even reflect the NPA’s intention to limit damage to material.

This thesis may be tested against recent NPA attacks against military or police targets:

• In mid-December 2010, 10 soldiers were killed and two wounded in an NPA ambush in Northern Samar.
• In late August 2010, five soldiers were killed and one wounded when NPA guerrillas attacked a military outpost in Agusan del Sur province in Mindanao’s Caraga region.
• In late August 2010, eight police officers were killed in an NPA ambush in Northern Samar.
• In early July 2010, seven soldiers were killed in an NPA ambush in northern Luzon’s Mountain Province.

These attacks demonstrate the NPA’s willingness to, on their own terms, directly confront the security forces. They also imply that the NPA’s motives for targeting mining and other commercial operations represent a calculated policy rather than military opportunism.

Motives

The CCP/NPA motives for targeting mining and other commercial ventures are varied.

The NPA’s main defence against the state is the support it receives from within the communities its cadres operate. This determines the guerrillas’ tactics, if not strategy, and therefore tends to reflect the concerns of the often remote regions the NPA favours for its bases and operational “fronts.” 

As many of the communities, notably those comprising tribal groups, oppose industrial development and are highly dependent on the environmental status quo, the NPA has a political motive for emphasizing its opposition to mining operations. 

However, mining also provides employment opportunities valued by other sections of the community that the CPP/NPA do not wish to alienate, which leads them to also focus on the terms and conditions of employment offered by the mining and ancillary companies.

Further, and to many analysts most importantly, miners and their contractors are potentially lucrative source of income that would vanish if the NPA used excessive or frequent force. In addition, the threats against mines or other businesses have created a large private security presence. These individuals rarely offer a serious challenge to the NPA, but they do serve as a useful source of firearms, mobile telephones, radios and other equipment needed by the guerrillas.   

 Finally, the mines and other projects that require state security also serve to disperse the armed forces and police, to the strategic advantage of the NPA. Troops are often spread thinly and their capacity to concentrate their efforts against the NPA reduced, while their vulnerable supply and communications routes offer attractive and low-risk targets for the guerrillas.

Mining company response  

By early 2011 very few foreign and domestic mining companies have been driven off their concessions in the Philippines by threats from the NPA. According to one source, the exception was a local company in Surigao del Norte in Mindanao’s Caraga region that ended mining operations in the region after its acting resident manager was shot dead by the NPA in mid-2000. The deliberate murder of the manager was the third NPA attack at the mine, which the communists sough
t to link to alleged environmental damage caused by the project and the company’s poor treatment of its employees. The reality is more likely that the company failed to pay the NPA the money it demanded.

However, according to military sources in Caraga, by late December 2010 at least seven mining companies operating in the region have complained of extortion attempts by the NPA and have implied they may have to leave the area, a prospect welcomed by at least one prominent Roman Catholic bishop. 

Another response has come from Senator Gregorio “Gringo” Honasan, the former army officer who led at least seven coup attempts against the former president Corazon Aquino. Honasan in early 2011 advocated allowing mining companies to raise and control their own armed militias to deter NPA attacks. Few foreign companies would be legally permitted by their own national laws to become involved in such a move. 

Summary

Allan & Associates do not believe that the CPP/NPA’s most recent threats against mining companies are credible or differ materially from similar threats made in previous years. 

As noted, the NPA relies on mining companies as reliable and lucrative sources of revenue, as well as a mechanism for mobilization among many traditional communities and arsenals for their operational units. If local opposition to mining was to fade, which it currently shows no signs of doing, then the CPP/NPA could be expected to switch their attention elsewhere.

A greater risk than the current situation, which at least partly favours the NPA, could evolve if the government and mining companies decided to further “militarize” security by seeking to directly confront the communists through the use of greater force. Heightened tension and increased conflict would lead to an inevitable increase in civilian casualties, human rights abuses and the potential for corporate reputational harm. 

The reality of the predicament facing many mining companies is that quietly paying off the NPA may be the only option if projects are to go ahead or have production maintained. In strictly economic terms the payments demanded by the communists can be treated as costs like any other expense – with the rising price of fuel probably a far greater burden on operations than extorted “taxes.”

– The author is an associate with Hong Kong-based security risk management consultants Allan & Associates (www.allan-assoc.com), which was formed in 2006 to provide services to individuals, businesses and government agencies operating throughout the Asia-Pacific region. For more information, please contact Bradley Allan in Hong Kong at +(852) 2987 7926 or ballan@allan-assoc.com.

The organizational structure of a National People’s Army (NPA) front

• NPA units are organized within “fronts” – defined territorial areas that mark administrative and operational military responsibilities.
• The AFP’s assessment of 48 fronts is unsurprisingly challenged by the CCP/NPA, who claim that around 120 fronts were active in 2010. Regardless of their true number, both the AFP and CCP/NPA do agree on the generic structure of a front.
• Front Committees answerable to Regional Committees are territorial political organizations covering between four and six municipalities. Some fronts control a Main Regional Guerrilla Unit (MRGU), regular mobile armed units of between 30 to 50 fighters. In addition urban fronts may have a Partisan Unit for sabotage and assassination operations.
• Below the Front Committee are up to three District Committees, plus a Front Guerrilla Unit (FGU). The District Committees are political organizations responsible for a number of barangays (the smallest government administrative unit, usually a village or suburb) or a couple of municipalities.
• The FGU is a local regular military unit containing up to 20 armed fighters, usually divided into two to three sections. Each District Committee also contains two to three Section Committees and an Armed Propaganda Unit.

• The Section Committees are political organizations responsible for mobilization work at village and town level. Armed Propaganda Units are responsible for spreading and maintaining the CPP/NPA influence in local communities.

Attacks against mining projects, April 2007-December 2010

Dec. 20, 2010: Two security guards at an exploration site near the Swiss-U.S. Xstrata-owned Sagittarius Mines Inc’s (SMI) project’s main Tampakan base in Mindanao’s South Cotabato province were shot and wounded by a member of the local B’laan tribe protesting against the company’s operations. The Tampakan site, which could cost US$3 billion to develop, has been explored by foreign mining companies for more than a decade. The development is opposed by a broad coalition of local groups, ranging from environmentalists to the Catholic Church. 

Dec. 3, 2010: Around 20 communist New People’s Army (NPA) guerrillas attacked a small local gold mine near Pantukan town in Mindanao’s Compostela Valley province and seized at least 12 firearms from the site guards, one of whom was killed in a brief skirmish. 

July 23, 2010: Up to 50 NPA guerrillas simultaneously attacked JB Management Mining Corp. site at Mount Diwalwal, near Monkayo in Mindanao’s Compostela Valley and a nearby army post. Mine guards reportedly fought the attack and no casualties or serious damage was reported.

July 2, 2010: Around 30 members of the Mamanwa tribe set fire to six heavy plant vehicles owned by the local operator Taganito Mining Corp. in Claver, Surigao del Norte, Mindanao. The raid by the armed tribesmen was linked to claims by the tribe that TMC owed them royalties from the nickel mine.

May 1, 2009: About 12 suspected NPA guerrillas raided the site of the local operator Maricalum Mining Co. near Sipalay City, Negros Occidental province, Western Visayas, and seized 12 firearms from the six security guards on duty and two policemen who responded to the attack.

March 9, 2009: Eleazer “Boy” Billanes, chair of the South Cotabato People’s Alliance for Nationalism and Development (SOCPAND), was shot dead by two unidentified motorcyclists in Koronadal City, capital of Mindanao’s South Cotabato province. The NPA blamed SMI in Tampakan and the Philippine military for the killing of the anti-mining activist, and vowed to avenge his death.

Jan. 20, 2009: Up to 20 suspected NPA guerrillas raided the site of local operator Phil. Youbang Mining Corp.’s molybdenite mine on Mount Mati, Davao Oriental province, Mindanao, setting four units of heavy equipment on fire. 

Dec. 28, 2008: Up to 60 NPA guerrillas attacked the mine site operated by local nickel ore company SR Metals Mining Corp. near Tubay, Agusan del Norte province, Mindanao. The NPA fighters burned six heavy mining vehicles, seized 21 firearms from the seven private security guards protecting the site and a nearby police station and wrecked a newly built mobile telephone mast. The attack was linked to extortion demands.

Dec. 21, 2008: An unknown gunman fired at a vehicle near the Tampakan mine site in Mindanao’s South Cotabato province, killing one worker and injuring two others. 

July 23, 2008: Up to 25 NPA guerrillas attacked  a mine project in Siplay City, Negros Occidental province, Western Visayas, set fire to an accommodation building used by United Philippines Drilling Corp. and seizing the security guard’s shotgun and pistol. There were no casualties in the raid, which was linked to an extortion bid. 

July 20, 2008: An unknown number of NPA guerrillas attacked the Tampakan mine site in Mindanao’s South Cotabato province, burning a drill rig but causing no casualties. Two soldiers were subsequently
wounded during operations to track down the raiders. It was the second attack against the site in seven months. The attack was linked to an extortion bid.

July 8, 2008: At least 20 armed NPA guerrillas raided the field office of South Korean-owned Philco Mining Corp. in New Bataan town in Mindanao’s Compostela Valley. The attackers overpowered the lone security guard and burned a generator before fleeing. The raid was linked by the military to an extortion bid. 

March 6, 2008: At least 50 NPA guerrillas raided the Anglo-Norwegian owned Apex Mines outside Maco in Mindanao’s Compostela Valley province. The raiders disarmed at least 13 security guards, seized firearms and burned five mining vehicles. No casualties were reported in the attack. The same site was raided by NPA guerrillas on Oct. 30, 2005, when weapons were seized from the security guards. 

Feb. 6, 2008: Up to 30 NPA guerrillas were involved in an attack on a gold processing plant operated by JB Management and Mining Corp. at Mount Diwalwal, near Monkayo in Mindanao’s Compostela Valley province. Two of the company’s security guards were killed in the attack and their weapons seized. 

Jan. 1, 2008: Up to 100 NPA guerrillas raided the Tampakan mine site in Mindanao’s South Cotabato province. An administrative building and a sub-contractor’s office were burned down and weapons and office equipment were seized. According to an NPA statement the attack was intended to end Xstrata’s operations in the area. 

Oct. 3, 2007: Up to 40 NPA guerrillas raided the Australian-owned El Dore Mining Corp. site in Labo, Camarines Norte province in the Bicol region. The attackers set fire to heavy equipment and vehicles and seized weapons and mobile telephones from the security guards. No injuries were reported. Philippine authorities characterized the attack as a bid to extort money.

April 3, 2007: Up to 50 NPA guerrillas raided a gold mine site being developed by Australian-owned CGA Mining Ltd. in Aroroy, Masbate province in the Bicol region. The guerrillas set fire to five buildings and some heavy equipment. A police officer who pursued the attackers was killed.