Historically, mining in the country was introduced by Spain with the issuance of the royal decree of 1837 creating the Inspeccion General de Minas; it was the first law that allowed the opening of local mineral resources to exploration. Between its approval and the takeover of the islands by the Americans by virtue of the Treaty of Paris, which was sealed on December 10, 1898 and took effect with the signing of the Spanish-American Treaty on November 7, 1900, only Lepanto Mine, established by Cantrabro-Filipino in 1864, took up the challenged; it, however, closed shop a decade later for lack of technology and as a result of the fierce refusal of natives to cooperate in the new venture.
During the U.S. colonial rule, mining became more dynamic. In 1900, the American administration created a mining bureau to handle the mineral exploration of the colony. To legitimize this, the Schurmann Commission, the first Philippine legislature under the U.S., passed the Philippine Bill of 1902, the second mining law ever enacted.
A year later, Benguet Consolidated Mining Company, the first American mine firm in the country, was founded by Metcalfe Clarke and Nelson Peterson, both former America soldiers, and Henry C. Clyde, a soda fountain owner, on August 12, 1903, the same year Kennon Road and Camp John Hay were constructed. Seventeen other gold mineral explorations followed suit in Baguio that by the early thirties, there was already a mining boom in the country.
With the establishment of the Commonwealth, a new mining law known as Act No. 137 was enacted in 1936. That same year the Bureau of Mines was created. Before the breakout of World War II, the companies engaged mainly in gold exploration ballooned to fifty-two.
The first mining outfit to explore the mineral resources in Southern Mindanao was Mineral Exploration and Development, which listed its office as Soriano Building, Manila. It was registered on December 1, 1933, had an authorized capital of P250,000, and listed N.H. Duckworth and J. Elizalde as president and vice-president, respectively. It was followed by Davao Gold Mine (DGM), which the Elizaldes controlled. It made its original claims of the Hijo area, in Compostela Valley Province, in 1934, but production did not start until 1940 later when its processing plant went into operations. Uranium deposits were also reported to have been found “in the mountains near Davao City.”
By 1940, encouraged by reports of a rich gold find in Hijo, two American miners, J.W. Brady and H. Lindbloom visited the site to observe the progress of the exploration. That same year, the mining company’s aerial tramway was completed by G.M. Kilcar of the Interstate Equipment Company of New York. One of the key members of the operations staff of DGM, J.H. McGillivray, a Canadian, resigned that same year to return to his home country to fulfill his war duty as reserve officer. The following year, Americans A. Durkee and D.G. Headley, formerly of the Balatoc mines in Kalinga-Apayao province, joined the DGM.
World War II disrupted any semblance of organized mining in Davao region. It was only in October 1955 when DGM, as Samar Mining Company (SMCI, first registered in 1937), started gold production in its Masara mines under the same owners. The mineral boom that followed in the seventies gave rise to new opportunities in the mining sector. SMCI, already in the red due to mounting loans, saw the rise of prices in the world market as a chance for recovery. With a claim over eight hundred twenty-one (821) lodes of high-grade ore scattered over 7,389 hectares in Amacan, within the peripheral areas of Hijo, the ball was set for a high-powered shot.
Negotiations, though, had earlier begun for the North Davao Mining Corporation (NDMC), another Elizalde interest chaired and presided by Manuel “Manda” Elizalde, Jr., to take over SMCI. With the usual due diligence, NDMC, which was organized not too long ago, took over SMCI in 1978 for P30 million but retained the services of Manda, then the government’s president assistant for national minorities (PANAMIN), to remain as company chairman and president. During this period, the NDMC had two major mining operations in the area, namely, the Amacan Copper and Hijo Gold Projects.
By 1979, obviously with the use of Elizalde’s connections, the new company obtained a huge loan from the Philippine National Bank (PNB), a state depository bank. That same year a complete supply agreement was signed by NDMC with international Finnish contractors, with the local firm D.M. Consunji Inc. (DMCI) undertaking the civil works for the building of a copper plant that was capable of processing 25,000 to 30,000 metric tons of ore daily.
Around this period, aggressive policies that affected the company and the financial scams that for sometime were kept under wraps started to leak. Preempting a full-blown scandal, Elizalde relinquished his leadership of NDMC to Panfilo Domingo, then the PNB chair, in 1980 and fled to Costa Rica, in Central America. A government audit report made during the first Aquino administration showed that NDMC obtained an overall loan of P4.7 billion from PNB using a collateral worth only P991 million. The obligation, in part due to non-payment, later bloated to P6 billion pesos because of dollar exchange losses.
In 1986 NDMC was sequestered by the Presidential Commission on Good Government (PCGG) on suspicion as one of the behest loans beneficiaries. The Assets Privatization Trust (APT), an agency created to handle state accounts, absorbed the financial obligation of the beleaguered firm until it was closed in 1992 due to plunging metal prices in the world market. Adding urgency to the closure were the prevailing difficult economic conditions and internal management issues hounding the company. Its assets were later placed under the receivership of the Privatization and Management Office (PMO) until it was transferred to the Philippine Mining Development Corporation (PMDC) on April 7, 2006 for disposal.
