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close this bookConflict over Natural Resources in South-East Asia and the Pacific (UNU, 1990, 256 pages)
close this folder2. Conflict over land-based natural resources in the ASEAN countries
View the document(introductory text...)
View the document2.1 The ASEAN region: great wealth and great strife
View the document2.2 The historical roots of conflict
View the document2.3 The plunder of forest resources
View the document2.4 The transformation of a natural resource: from agriculture to agribusiness
View the document2.5 Conflicts over mineral resources
View the document2.6 Development and tribal peoples: resistance to displacement
View the document2.7 Natural resource abuses: a time for change
View the documentReferences

2.5 Conflicts over mineral resources

The struggles over the world's mineral resources by various countries has often provided impetus for wars, whether of a limited scope or world-wide. Shortages of iron and steel for Germany's industries and the spectre of 4 million workers going jobless are said to have influenced the decision of the Kaiser to participate in the First World War (Eckes, 1979). Japan in the Second World War coveted the rich mineral resources of East and South-East Asia to support an industrial expansion programme.

South-East Asia, particularly the ASEAN countries, holds major reserves of some of the world's most important and strategic minerals (Balai Asian Journal, 1981:14-17). The Philippines is the third largest producer of chromite after South Africa and Zimbabwe it has the third largest reserves of cobalt after Zaire and New Caledonia; it was the ninth largest producer of copper in 1980; and it is a major producer of nickel and silver. Indonesia has the highest reserves of tin in the world24 per cent of 10 million tonnes. Malaysia, which ranked fifth in reserves, produced the most tin in 1980 25. 36 per cent of the world total. Bauxite deposits are found in both Indonesia and Malaysia; zinc is found in both Thailand and the Philippines. Thailand also produces tungsten ore, lead ore, antimony, iron ore, and manganese.

TABELE 2.7 ASEAN: Mineral Production and Exports, 1976

  ASEAN Indonesia Malaysia Philippines Singapore Thailand
Tin Concentrate
Production1 115 23 64 - - 28
Export Volume1 102 13 693 - - 20
Export Value2 692 83 4633 - - 146
Copper Concentrate
Production1 1 158 223 78 857 - -
Export Volume1 1 158 223 78 857 - -
Export Value2 381 86 29 266 - -
Nickel Concentrate
Production1 29 144 - 15 - -
Export Volume1 21 94 - 12 - -
Export Value2 83 24 - 59 - -
Iron Ore
Production1 1 196 292 308 571 - 25
Export Volume1 883 207 9 667 - -
Export Value2 5.36 0.16 0.2 5 - -

Sources: Asian Development Bank; Land and Mines Department, Malaysia; SGV-Utomo, Indonesia; SGV-Na. Thalang & Co., Thailand.

1Thousand tonnes.
2US$ million.
3Net export figures, i.e. export of tin concentrates from ore mined locally only.
4Figures estimated on basis of ore production.

International Disputes

The potential for conflict lies in the relationships between these countries and the world's major industrial powers, which are heavily dependent on the supply of raw or lightly processed minerals to fuel their economics. Data compiled by the Japanese Ministry of International Trade and Industry (MITI) show that Japan's degree of dependence on other countries for key minerals in 1982 was as follows: coal (81.8 per cent), iron ore (98.7 per cent), copper (96.0 per cent), lead (83.9 per cent), zinc (68.5 per cent), tin (98.4 per cent), aluminium (100 per cent), and nickel (100 per cent) (MlTI, 1982: 100). Asian countries are the main source of Japan's raw materials, particularly minerals.

In 1974 a major trade crisis arose between the Philippines and Japan (Stat Romana, 1976: 88-90). In December 1974 the three major buyers of copper concentrates in Japan-Mitsubishi, Nippon, and Mitsui Smelting-announced a 30 per cent cutback on purchases of Philippine copper effective the following month. Japan's dumping of refined copper in the international market reduced foreign demand for the Philippine produce while internal recession resulted in a slump in domestic sales. Since 80 per cent of Philippine copper was sold to Japan at that time, the cutback severely affected the country's trade balance, which showed a larger deficit compared to the previous year. The Philippine government tried to invoke the newly ratified Treaty of Amity, Commerce, and Navigation with Japan in urging Tokyo to withdraw the cutback, but the Tanaka government rejected the proposal and the crisis was extended up to the middle of 1975.

Another aspect of international disputes over minerals is related to the moves towards industrialization made by developing countries, as seen in the plans to set up mineral-processing facilities in their own areas. The Philippines' plans to set up an integrated steel mill have been on the drawing board for many years but have not been implemented because of the lack of cooperation from Japan. Instead, what the Philippines obtained through Kawasaki Steel, a Japanese conglomerate, is the now-infamous iron-ore sintering plant. Thirtytwo per cent of the US$250 million copper smelter's equity ended up in the hands of a consortium of Japanese firms, whick also constructed the plant from funds provided by the Export-lmport Bank of Japan (Tadem, 1983: 107-8). Fifty-eight per cent of the plant's output is committed for export to Japan. In order to repay the loan-at a high 18 per cent interest refining charges have been set at a level higher than that charged by Japanese plants. Filipino mining companies, which have been ordered by presidential decree to sell a fixed percentage of their production to the smelter, have repeatedly complained about this imposition. Lately, it was discovered that the plant's facilities were faulty, and a few months into production it had to shut down for major repairs.

Another case in point of Japan's exploitation of the Third World's need for technological and financial support and mineral resources is the Asahan aluminium project in North Sumatra, which includes an aluminium refinery and a hydroelectric plant, costing US$1 billion. The second largest Japanese investment in Asia, this project has raised a host of issues touching on national development, resource extraction, social dislocation, and environmental degradation which are discussed more fully in Yoko Kitazawa's chapter in this volume. Fears have also been expressed that the project will only reinforce the dependence of the Indonesian economy on Japan.

Foreign exploitation of the natural resources of Third World countries is also exemplified by the Gunung Bijih copper mine in Irian Jaya (Seigel, 1976). The first mining venture approved by the Suharto government, it is a transnational venture involving US, West German, and Dutch corporations. Freeport Minerals, a Texas-bascd American firm, is the main beneficiary of the project and was awarded a generous work contract by the Indonesian government, which gives it a virtually free hand in the 38 square mile contract area, in addition to granting a three-year tax holiday.

The mine began operations in February 1973, and during the next 23 months it earned profits amounting to three times Freeport's original equity investment. Because the firm's contract specified that it need not pay dividends until 1 January 1987, the Indonesian government sought a renegotiation of terms in order to cash in on the windfall. The resulting adjustments, however, did not cause any substantial loss for Freeport, even though it agreed to forgo the second and third years of its tax holiday.

Effects of Mining on Local Communities

Large-scale foreign-supported mining operations and their expansion not only affect Third World economies at the national level but would also have an impact on the livelihood of farming communities who are forced out by the companies. A case study of the growth of Atlas Consolidated Mining and Development Corporation in Cebu province in the Philippines shows the gradual takeover by the company of agricultural lands (McAndrew, 1983: 535). Atlas is reported to be one of the top five mining firms in the world. In the town of Toledo, where Atlas has its main copper mining operations, data from the Bureau of Census and Statistics show a marked decrease in the number of farms planting maize (the province's staple food) and the area planted to the crop. In 1960, 5,074 Toledo farms were planting maize over an effective crop area of 12 549 ha. Eleven years later, only 1,570 farms were still operating on an effective crop area of only 2 500 ha. Total maize production also dropped from 149,794 cavans (1 cavan = 50 kg) in 1960 to 18,715 cavans in 1971. In 1960 more than half of Toledo's total population were considered to be farmers, but this dropped to only one-fourth by 1970-1 (McAndrew, 1983: 53-5).

The McAndrew study cited here also revealed that few farm families displaced by Atlas were taken on by the company as employees. Citing a survey by a University of the Philippines team, the study pointed out that only 14.5 per cent of Atlas rankand-file workers lived in Toledo. Most of the farmers displaced by the mine simply migrated out of the town.

Mining operations often pose grave dangers to the safety of mine workers and surrounding communities. Inadequate safety measures could result in landslips, the bursting of bunds, and other mishaps. In Malaysia, a single landslide in Gunung Ceroh in 1973 killed 30 people, and 29 more died in twelve landslips from September 1974 to November 1976 (CAP, 1978). The gravel pump method used by more than 55 per cent of Malaysian tin mines is often responsible for accidents resulting in deaths. Malaysian tin mining had its blackest week in March 1981 when 27 people died in three separate landslips within a period of 8 days: in Puchong (19 deaths), Kampar (5 deaths), and Tanjung Tuallang (3 deaths). From 1963 to 1981, there were fifteen major mining disasters in Malaysia, with a total of 157 lives lost.

Environmental hazards are also a by-product of the extraction and processing of minerals. Mining generates a high percentage of waste materials. Only a small portion of pulverized rocks is extracted-e.g. 0.05 per cent of gold and 0.5 per cent of copper. The rest is impounded in tailing ponds and rock dams. Thus, more than 99 per cent of extracted earth and rocks turn to waste or silt. The adverse impact of these wastes on local communities is receiving increasing documentation. For example, in 1980 some 3,000 farmers in La Union province in Northern Luzon filed for damages to an area of farmland comprising some 3.782 ha that had been affected by mine tailings from three mining firms (Danguilan-Vitug, 1980: 19, 23). The farmers asked for pI,300 each as compensation for the loss of one year's harvest. A team from the Ministry of Agriculture inspected the damage and estimated the loss caused by the mine tailings at 20 cavans/ha/yr. Thus, instead of harvesting 60-80 cavans/ha/yr, the farmers produced only 40-60 cavans/ha/yr.

In the llocos region, also in Northern Luzon, four major rivers are heavily polluted, thus affecting the livelihood of nearly 500,000 farming families (Belena, 1980 9). The Bureau of Soils has confirmed that mine wastes discharged into these rivers cement soil in irrigated rice lands and thus choke the rice paddies. Moreover, waste from mines, unlike eroded topsoil, renders rice-fields infertile. An ad hoc committee on pollution created by the Provincial Regional Office for Development discovered that 75 000 ha of farmland in Pangasinan and La Union provinces are directly affected by pollutants from the mines in Benguet. Nineteen towns in these two provinces receive fine sand, cyanide, and mercury from the mines every year. Rice harvests have dropped between 5 and 40 per cent yearly with the damage in the two provinces estimated at P388 million/yr.

Traditional fishing grounds also suffer from pollution from mining. Aquatic life has all but disappeared from the Agno River. In 1980 a team of researchers from Silliman University conducted an underwater study of marine life in and around the tailing discharge area off the coast of Toledo in Cebu (McAndrew, 1983 60-1) It was discovered that within the vicinity of the pipeline, all the animals found were dead, and the ocean bottom was heavily silted and devoid of benthic organisms. The report stated that 'it is difficult to attribute the death of these animals to factors other than the acute sedimentation of the bottom brought about by the dumping of mine tailings' from the Atlas Consolidated Mining and Development Corporation (McAndrew, 1983). Dr A. S. Alcala, head of the research team, concluded forcefully that 'in the light of recent data on marine pollution by mine tailings dumped directly to the sea, such as those of Atlas . . . it is a mistake to consider disposal of copper mining wastes to the sea a safe procedure' and that 'sea disposal of mine tailings is inimical to sea life, especially the benthic forms' (McAndrew, 1983).

The Social Costs of Mining Activities

Mine workers receive relatively low wages in spite of the hard physical work and danger they face. In the Benguet gold mines in Northern Luzon, miners strip to their underwear before they enter or leave the underground mines and are subjected to the radioactive rays of a metal detector. Constant daily exposure to these harmful rays has resulted in various ailments to the miners, including rapid ageing, general malaise, and loss of sexual potency. In 1978, 1,138 Benguet workers resigned for health reasons. Conditions in the mines are appalling, as described in the following report:

Crawling into the mine tonnel is a whole new nightmare. Extending some 60 miles, the labyrinth weaves into the core of the earth from 3,000 to 5,000 feet underground At that depth, temperatures soar to a blistering loo degrees Fahrenheit, so hot that miners don nothing but briefs and helmets for work. Like overheated machines, these miners are cooled periodically by dousing from a water hose. The dark and dank tunnels also expose them to dust, grime and toxic gases. Inadequate oxygen is another risk.... The biggest spectre that haunts them, however, is the dreaded cave-in. Blasting rocks to ferret out the ore, miners expose themselves constantly to landslides, failing rocks, and the very real possibility of being buried alive (Bala' Asian Journal, 1981: 24)

Conditions for the families of miners are just as bad. At Benguet, the 'free housing' means a 'one-room affair, 3 by 7 meters, shared by two families, totalling 10 to 17 persons', and a family of six 'sleeps in an area the size of a dining table, elevated from the floor ... while another family sleeps underneath' (Bala' Asian Journal, 1981: 24).

The low wages and poor working conditions have precipitated many conflicts between mine workers and mine owners. Perhaps the longest mine workers' strike in South-East Asia occurred at the Atlas copper mines in Cebu (McAndrew, 1983). Started in 1966 with a walk-out by almost the entire work-force, it continued into 1985, with some 800 to 1,000 workers of the original 4,000 still on strike. The workers originally asked for housing allowances, more decent transportation to and from work sites, salary increases, and safety equipment. The conflict dragged on because the company, which was largely owned by foreign nationals and corporations, consistently refused to negotiate with the union and instead invited another union to organize in an effort to break the strike. The company even specially constructed a camp for two companies of Philippine Constabulary (PC) troops to police the strike. Seabs flown in by helicopter continued the work of the strikers. Despite the dispute, Atlas that year (1985) experienced its most profitable season ever, and although reluctant to share this windfall with its workers, it declared a stock dividend of 25 per cent.