Philex says P1-B fine 'grossly unfair'

Posted at 09/27/12 11:24 AM

MANILA, Philippines - Philex Mining said it will contest the P1 billion fine imposed by the government over the mine waste spill at its Padcal mine in Benguet.

"Philex will contest the imposition of the tailings fee," Philex senior vice president for finance Renato Migrino told the stock exchange. 

The Mines and Geosciences Bureau (MGB) sent a letter dated September 26 to Philex, asking the company to respond to its report on the August 1 spill of its tailings pond in Padcal and its imposition of a  P1,034,358,971  fine

The MGB based the P1 billion fine on the Mining Act of 1995, which states a fee of P50 per metric ton of solid fraction of tailings is imposed on mining contractors that were found to have discharged tailings. 

In a statement, Philex Mining senior vice president for corporate affairs Mike Toledo said it is "grossly unfair" for the government to impose such a huge fine on the company for the incident which was caused by an act of nature.

He said one of the most basic principles of fairness and of law is that no party should be held responsible or be penalized for events over which it has no control. 

Toledo noted that even Philex's mineral production sharing agreement with the "exempts Philex frmo the performance of its obligations if the cause is force majeure and so outside Philex's effective control."

Toledo said the MGB report "effectively confirmed the spill was not caused by Philex." 

Philex quoted the MGB report as stating: "PMC personnel have not been remiss in carrying out the Guidelines (on emergency preparedness), SOPs (standard operating procedures) and SJPs (standard job procedures) and thus may not be held liable for the incident."

Philex has said the leak from its tailings pond last August 1 was caused by the "historically unprecedented heavy rains generated by Typhoon Gener at the Padcal site reaching 331.80mm on the day of the spill." The rains exceeded the 50-year rainfall record for Padcal of only 234.5mm for a single day. 

The mine waste from Padcal then spilled into the Balog creek, and the Agno River, one of the country's largest rivers. 

Philex has been given 7 days to answer the MGB's letter.