Bonanza Could Rival S. Africa Mines : Gold Rush Sparks Wealth and Misery in Philippines

Camilo Banad, an illiterate tribal hunter, was tracking wild boar through a virgin stream near the peak of Yellow Mountain here three years ago when something glittered in the river bed.

Banad bent down. He raked his gnarled fingers through the river pebbles and came up with a shimmering nugget the size of his thumbnail. Banad smiled. He recognized it at once. It was pure gold.

But not even Banad, a veteran mountain guide who knew the rivers and jungle trails of Yellow Mountain like the lines on the back of his hands, could foresee the tens of thousands of lives his discovery would touch--and the hundreds it would destroy--in the years to come.

On the morning of Sept. 23, 1983, Camilo Banad quietly started what is now the biggest gold rush in Philippine history. Quite by accident, he had stumbled onto what Philippine government officials now believe may well be the richest gold vein in the world, a deposit of thousands of tons of high-grade ore that has given renewed hope for economic recovery to the cash-strapped administration of President Corazon Aquino.

His find, which the government now predicts may eventually lead to a national gold industry that will rival that of South Africa, has created an employment boom in the heart of the Philippines’ most economically depressed island, Mindanao.

Natural Resources Minister Ernesto Maceda, in signing an order legalizing small-scale gold mining for the first time, said it will create as many as 800,000 new jobs for the region.

“This might be the bright spot in our entire economic recovery program,” Maceda said in a recent interview. And, using a phrase in the native Tagalog language, he added, “This is, as they say, hulog ng langit --a blessing from heaven. It’s too good to be true.”

It is, indeed.

If the gold rush that has turned Yellow Mountain and the rugged mining town of Diwalwal into a Wild West-style area reminiscent of the great California Gold Rush of 1849 is a blessing, it is a mixed one, at best.

In reality, it is a bonanza for some, built on the blood and backbone of thousands of the poorest of poor Filipinos. In a nation with a tradition of the rich taking from the poor, the scramble to capitalize on Diwalwal’s high-grade ore has become a kind of paradigm of life in the Philippines today--a saga of exploration by exploitation.

Land Claims Stolen

Banad, who started it all, embodies much of that story. A Seventh-day Adventist, Banad said he “wanted to share my good fortune with others.” His initial partners, wealthy nearby landowners, stole his land claims from him, and, today, he is still an impoverished peasant living in a plywood shanty on the side of Yellow Mountain.

So it is in Diwalwal today. The miners on Yellow Mountain do not own the mines. They are owned by the rich, many of them in the large towns and cities 2,000 feet below.

Those same businessmen also own most of Diwalwal, a mountainside shantytown of 6,000 crumbling huts, dozens of honky-tonk bars that blare the latest disco tunes, houses of prostitution where prices are double those in the nation’s sophisticated capital of Manila, 575 miles to the north, and scores of gambling parlors and pool halls where players risk as much as 5,000 pesos ($250) on a single game.

So skewed are Diwalwal’s prices that one enterprising and influential local politician who opened the town’s first electric company four months ago charges a rate equivalent to 50 cents a day to power a single 50-watt bulb--and he collects his money daily.

Virtually none of the 50,000 people now considered permanent Diwalwal residents actually own any of the 204 makeshift mines that have been punched into the side of Yellow Mountain.

Lure of Riches

Most of them are, like Banad, poor peasants, families that flocked to Diwalwal for what Maceda called the “romantic possibility of get-rich-quick.” They fled the poverty and hopelessness of Mindanao’s cities and towns, where the statistics fall well below the national average of more than 50% unemployed or underemployed.

But when they reached this boom town, the hopeful prospectors discovered that they needed a lot of capital: money for payoffs to open mines that could not be licensed legally, money for tools and transportation, money to compete with even bigger money from the wealthy financiers in the nearby cities.

In Diwalwal, they are now called the abanderos, the mine people, and they represent the majority of the town’s population. Men and women, they work 12-hour shifts at the bottom of narrow, 200-foot mine shafts that the government’s Bureau of Mines has declared unsafe. Or they are the bearers who earn 15 pesos (75 cents) to carry 120-pound sacks of gold ore on their heads over several miles of mountain trails.

Or they are children and old people, too weak for the mines, who spend hours, bare-handed, treating pulverized ore with liquid mercury, a crude gold refining process that health officials say will ultimately result in insanity and death among the workers when the mercury works its way through their bloodstreams into their brains.

In the last year alone, hundreds of abanderos have been crushed to death or suffocated in Diwalwal’s gold mines. More than 120, by official count, died in a series of landslides last October. One government official believes that the death toll was much higher.

Hundreds Killed in Landslides

“The landslides killed hundreds, no question about it, but the bodies are buried so deep, no one will ever find them,” said Jose Madrona, regional director of the Bureau of Mines.

“Still, they go back in. The bureau engineers have inspected the mines, and we have officially declared all them danger areas, but still they go back in. It’s the rainy season right now, and the landslides are sure to come, but still they go back in.”

Legally, Madrona said, his bureau could have shut down the entire operation long ago. But under the administration of former President Ferdinand E. Marcos, he said, the mining of Yellow Mountain was tolerated because it generated jobs. For the same reason, the Aquino government lets the mines keep operating, simply warning would-be prospectors that they go at their own risk.

Natural Resources Minister Maceda said that Marcos, ousted in February by a military-civilian uprising, deliberately attempted to keep the operation secret and outside the law because he wanted to keep the gold “going out through the back door” of the nation’s economy.

Maceda, who used to be Marcos’ executive secretary until he joined the political opposition a decade ago, charged that the former president never legalized the mining to ensure that the military could get its cut of extortion money and that he and his family could divert much of the gold for their own use.

Undeterred by Danger

Whatever the reason, the fact that the Yellow Mountain gold rush has been both illegal and dangerous has not kept the abanderos from pouring into Diwalwal, according to regional director Madrona.

“There’s a saying in the local dialect,” he said. “ ‘It’s not dangerous when it’s high grade.’ ”

No matter how high the grade, the miners themselves reap only a tiny fraction of the bounty that they risk their lives to extract from Yellow Mountain.

According to dozens of miners and tunnel owners interviewed at the mine site last week, the miners must turn over 73% of their ore to agents of the tunnel owners, most of whom are rich and influential businessmen living in the provincial capital of Tagum, four hours by a poor road to the south, or in Davao City, the largest metropolis on Mindanao.

The remaining 27% of the miners say they are forced to turn over a third to the Philippine soldiers stationed in the area. The military shakedowns, they say, have continued despite a national effort under Aquino and her military chief of staff, Gen. Fidel V. Ramos, to clean up the ranks of the nation’s historically corrupt and abusive armed forces.

Toll Booth Payments

But that is not all. For protection from ambushes by bandits and the heavily armed Communist insurgents who have been waging a civil war in the region, the miners must pay another 200 pesos ($10) at each of a half-dozen makeshift toll booths maintained by robbers and the insurgents along the 25-mile dirt road to the gold refineries at the foot of the mountain.

The road itself is so rough and dangerous that it takes 2 1/2 hours by jeep to traverse it. Several lives are lost in road accidents each week.

Maceda and other officials even closer to the situation in Diwalwal concede that military payoffs have continued on a large scale in the six months since Aquino replaced Marcos. So too, Maceda said, have payoffs to the insurgent New People’s Army, which, like the military, actually owns or controls several of the mines and crude refineries on Yellow Mountain.

Referring to the military detachment deployed in Diwalwal, where the soldiers are supposed to provide law and order, Maceda said: “They have a platoon up there that is supposed to guard. And, I suppose, in exchange for their services, they are given their share of the production.

“This seems to be a situation where there is a coexistence between the left and the right, as long as everybody gets his share,” he said.

Ingrained Exploitation

Maceda added that he is legalizing the operation specifically “to see how we can improve the income of these people (the miners)” and minimize the abuses. But he conceded that the system has become so firmly ingrained that exploitation inside the mines will probably continue even after the legalization order goes into effect next week.

The miners themselves concede that they will continue to risk their lives inside Yellow Mountain.

“It is a horrible life, really,” one abandero said, asking to be identified only as Joel because “we cannot speak out here or we will be killed.”

Joel, a student who left college when his government scholarship ran out, has been working in the mines of Diwalwal for 18 months. He said he has been injured three times inside the mines and twice in accidents on the road down the mountain. He said he cannot breathe properly because of the dust from the mines, and he limps badly.

“But where else do I go? On a good day in the mines, I can make 200 or 300 pesos ($10 or $15). It is true that the tunnel owner makes double that just on my labor, and the military, a third of it just because they’re holding the M-16s. But there’s nowhere else in Mindanao where I can make anything near that.

“For us abanderos, it is not a matter of choices. We have only one choice: survival or starvation.”

While the government is clearly aware of the miners’ plight, it, too, has plans to profit from the miners’ labors.

In the interview, Maceda conceded that the small-scale miners are just scratching the surface of a gold deposit so huge that someday the government is likely to step in and take it.

In the short term, he said, the large, privately owned mining companies that have since bought many of the mining claims from Camilo Banad’s original partners “do not resent the gold panning” on their land “because they are getting free exploration labor. These gold panners are going out and discovering all these gold veins. Eventually the big mining company will come in and work the whole operation.”

“The big mining company” is Apex Mining Corp., a Philippine company that, under Marcos, was given special rights in the region by the Bureau of Mines. Apex also owns several claims, has the mineral rights to mine tailings and is generally the dominant company in the area.

Richer Than South Africa?

Just how much gold is there in the Yellow Mountain vein?

Government geologists have yet to quantify the Mindanao mother lode, said Maceda, but U.N. and other experts have inspected the find, and “some have gone as far as saying that the gold (deposit) up there is even richer than in South Africa.”

Given the political problems in South Africa, could the Philippines, which now officially produces more than 20 tons of 99% pure gold each year, actually become the world’s biggest gold producer?

Maceda shrugged and said, “Well, why not?”

Asked whether so lucrative an industry would ever be nationalized, Maceda said, “Yes, eventually. But at this time, we just want to encourage it.”

The government already is benefiting by the operation, especially since Aquino’s new administration has begun enforcing a 1978 Philippine law requiring gold producers to sell all their production to the Central Bank.

In Diwalwal, there is little sign of any government. To potential prospectors like Porferia Lacson Amantial, the national government in Manila should be far more concerned about bringing law and order to the town than in legalizing an industry simply to help feed its own coffers.

Amantial has lived in Diwalwal since the beginning in 1983. She owns the only inn in town. She calls it the Mt. Diwata Lodge & Yellow Mountain Lunch House, and to call it a hotel is an exaggeration. Guests are required to sleep on wooden boards on the second floor above the clack and clatter of Amantial’s 24-hour pool hall and mah-jong parlor.

Amantial concedes she would prefer to own one of the gold mines. In fact, she did, she said, until it was “stolen right out from under me by the military. It was a profitable tunnel, and one day the soldiers just came with their guns and said, ‘This is our tunnel now.’ I lost 82,000 pesos ($4,100) overnight.”

Like many other hard-luck mine owners here, the innkeeper said she then invested another 90,000 pesos ($4,500) in a second tunnel, but that one is unprofitable.

Just 20 feet away from the inn, though, at a military checkpoint that is the only visible symbol of law in Diwalwal, business was much better.

A young enlisted man standing sentry at the checkpoint, the only entrance and exit from the town, explained that he had been posted to Diwalwal for just two months and already the miners had handed over to him 180 grams of pure gold for the privilege of passing by.

The gold, he said, was worth 27,000 pesos ($1,350)--27 times his monthly salary of $50--based on current local prices of 151 pesos ($7.55) per gram. But the soldier said he planned to hold onto his gold for awhile--”at least until the price goes up to 160 ($8).”