The European Green deal will need to look not only on the ways in which government’s activities, like public procurement, will stop harming the environment and contribute to tackle climate change, but also how will they mitigate the social footprint of the energy and green transition.

This blog reflects on the impacts of an increasing demand of Nickel derived from the green transition policies in the global north. Besides coins, kitchen utensils and appliances, Nickel is used in rechargeable batteries like the ones electric vehicles use, and stainless steel that is used in solar panels. Therefore, public bodies purchasing these products should be looking into implementing measures that can secure labour standards in the countries where Nickel is sourced from. A key focus for them should be the Philippines and the risk of abuse of decent working conditions in the mining industry in this country.

1.      The profile of mining in the Philippines

1.1. Mining Overview

The Philippines is strategically located in the Western Pacific next to China, its main market where Philippine mining products are exported. The country has rich deposits of copper, gold, nickel and other minerals waiting to be exploited, 55 operating metal mines and seven processing plants (of which four process gold, two nickel plants and one smelts and refines copper).

Notably, in February 2017, the Environment Secretary in office ordered the permanent closure of 23 out of 31 mines in the country and the indefinite suspension of five others for alleged environmental violations. This decision was reversed by former President Duterte in December 2021 and it is believed that newly elected President Marcos will continue with Duterte’s change of direction. It is based on the potential and role nickel is expected to play in the global energy transition.

1.2. Nickel

1.2.1. Nickel’s role and importance in the green energy and economic transition

Nickel is the most important metal by mass in lithium-ion batteries used to power electric vehicles. This metal is therefore set to play a vital role in the global transition to green energy and economy and towards the fulfillment of policies to combat climate change in Europe, particularly the European Green Deal (2019). Demand for lithium is expected to increase 40 times over the next two decades due to this transition. Butseveral concerns related to the sustainability of lithium extraction have emerged due to its intensive use of water.

1.2.2. Nickel in the Philippines: reserves, quantities and regions of production

Although the main region of interest related to lithium is in South America, the Philippines plays an important role as the sixth country with the largest nickel reserves in the world accounting for 4.8 million tonnes.Approximately 90% of the nickel mined in the Philippines is exported to China and the rest to Japan, UK and Brazil.

In 2020, the Philippines produced more than any other country – except Indonesia – with annual nickel production that reached 320,000 tons. An Indonesian nickel export ban introduced in 2020 is expected to boost the Philippines’ prospects of becoming the world’s top nickel producer. The Philippine government is keen to triple the size of the country’s mining sector by 2027, and nickel is a cornerstone of this resurgence.

The most productive region in the Philippines is Surigao del Norte in Caraga, while key nickel mining operations include the Taganito, Rio Tuba, Cagdinao, Carrascal and Adlay Cagdianao Tandawa mines. Most of the nickel mines are on Dinagat Island in the Caraga region. About half of the nickel mines in the Philippines are located in the Caraga region.

1.2.3. Mining companies with nickel production.

Nickel Asia and Global Ferronickel, two mining companies, operate extensively throughout the country. There is considerable Chinese investment in some of the nickel mines on Dinagat Island in Caraga. See table below for ownership of companies with existing rights to mine on Danagat Island.

2.      Mining Worker Profile: The Case of Dinagat Island

2.1. Working Conditions

In 2020 the average monthly wage of workers in mines and quarries was PhP 13,272 pesos (approx. 227.82 EUR).  Usually, mining companies have a policy of 48 hours of work per week. However, working hours vary depending on the area of operation. A typical miner, working on site, works 10 hours per day, although this is above the usual 8-hour workday, overtime is compensated.

Regular employees have social security benefits. Some are mandatory such as SSS, PhilHealth and PAG-IBIG. There is an intergenerational employment pattern where most workers have worked for long periods of time such as 10 years and their family members have also worked in the same company.

2.2. Main Labor Rights Abuses

The main labor rights abuses identified in Dinagat Island, one of the main areas where nickel mines operate in the Philippines are the following:

• Recruitment of workers without a contract: one out of every four workers does not have a written contract with the mining company in contravention of the Philippine Labor Code. Conversely, some of those who do have a contract are not aware of the conditions prescribed in such contracts.
• Delayed payment of wages: Particularly, there are no reports of non-payment of minimum or below minimum wages, but the wage of most is only the legal minimum. The minimum wage is commonly lower than that received by workers in other industries. Workers hired by contracting agencies commonly receive lower wages than those hired directly by the mining companies.
• Lack of payment in mandatory benefits: Benefits such as Social Security System (SSS), Home Development Mutual Fund (PAG-IBIG) and PhilHealth National Health Insurance Program (PhilHealth) are not paid adequately or not paid at all.

2.3. Recruitment/Recruitment Agencies

Most of these labor rights abuses are directly related to recruitment agencies. It is a common practice in the Philippines, including Dinagat Island, for mining companies to hire their workforce through these agencies. In a study conducted by Amnesty International, Cagdianao Mining Corporation expressed they request the recruitment agencies they work with, through their contracts with them, to comply with local laws, including those that protect workers’ rights and prohibit child labor. Workers interviewed by Amensty International were employed through an agency, including those temporary workers who are requested only seasonally, commonly for less than six months at a time.

There are complaints against these recruitment companies. Notably, one against Palhi Nickel Contracting Services (a recruitment agency) used by Oriental Vision Mining Philippines Corporation (mining company) and others for delayed payments, failure to increase minimum wages, discrepancies in mandatory benefits. As well as a second complaint against the same company for dismissal without payment of severance pay in which it was ordered to pay to four workers USD 855, which has not been complied with.

2.4. Barriers to the redress of abuses

Barriers to achieving adequate redress for abuses include physical barriers, since the institutions that process complaints are far away; economic barriers, since workers must pay their lawyers’ fees; time barriers, since a complaint can take a long period to resolve; and structural barriers, since there is a very strong asymmetry of power between workers and mining companies. In addition, there is little enforcement of labor laws in the Philippines.

3. Concluding remarks

EU public bodies buying products in which Nickel is a major component or a mineral within their composition, like electric vehicles and solar panels, should implement cross-border measures to prevent labour rights abuses with a particular focus on the Philippines. These measures should include mitigating the risk of labour rights abuse in relation to the existence of a contract, the workers’ understanding of the terms of the contract, the payment of, at least, minimum wages,  without delays, and the payment of social security benefits. Ultimately, public buyers should use their purchasing power leverage to facilitate redress of abuses, considering the particular barriers for remediation in this country.