MVP sees huge profit impact from Philex mine closure
MANILA, Philippines (UPDATED) - Philex Mining Corp said its full-year earnings will be "materially impacted" by the closure of its copper-gold mine in Benguet province.
In a statement to the Philippine Stock Exchange on Thursday, August 9, Philex said it expects to lose P220 million for every month that the Padcal mine remains closed.
"The board of directors have taken the prudential but painful step of maintaining the suspension of the company's operations until such time as the appropriate rehabilitation and restoration plans have been composed and approved," said Philex chairman Manuel V. Pangilinan.
"Shareholders should be aware that the full-year earnings of Philex will be materially impacted," he added.
In an interview during the first-half financial briefing of Philex affiliate Metro Pacific Investment Corp, Pangilinan told reporters that the mining company will not meet its core net income guidance of around P4 billion this year. "We would have expected to realize that... but it will not be P4 billion."
"Starting August, there will be very little revenues," he added.
Philex said Padcal mine operations "will remain suspended until such time that safety and integrity of its tailings pond are assured."
Pangilinan said they hired experts "to tell us the length of time it will take to fix the problem." He said the initial projection was that operations would be suspended for 5 months.
On August 1, the government ordered the Padcal mine closed after waste leaked from its tailings pond, threatening to contaminate the Agno River and a tributary. The spillage was contained on August 4.
Losses and fines
The P220-M per month losses that Philex now expects from the continued closure of the mine is much lower than the earlier estimate given by the company.
Pangilinan had said the closure might result in up to P40 million loss per day. That's equivalent to P1.2 billion a month.
On top of the losses, meanwhile, Philex is also facing fines for the waste spillage and added costs for the clean-up.
The Mines and Geosciences Bureau earlier cited the following penalities that may be imposed on Philex:
- P50 per ton of sediments that spilled from the tailings pond under the Mining Act
- A penalty of P100,000 per day to a maximum of P200,000 per day for seepage of pollutants into bodies of water under the Clean Water Act
The Padcal mine will remain closed until safety requirements are met.
"Philex has to submit a rehab plan for the pond itslef. Corporate approvals will have to be secured before they allow us to resume operations," noted Pangilinan.
The spillage occurred after heavy rain from successive tropical cyclones weakened the mine's talings pond structure, Philex officials earlier said.
The accident came amid an intense public debate about the mining industry in the Philippines, which is believed to have some of the biggest mineral reserves in the world.
These reserves however have been largely untapped because of a strong anti-mining movement and poor infrastructure and security concerns that have kept investors away. - Rappler.com, with a report from Katherine Visconti
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