Sy group has stake in Tampakan mine

Edwin G. Espejo
The business empire of the Philippines' richest man already has a stake in the one of the world's undeveloped gold-copper mines

GENERAL SANTOS CITY, Philippines – The business empire of the Philippines’ richest man already has a stake in the one of the world’s undeveloped gold-copper mines.

The Sy-led group, through its banking unit Banco De Oro (BDO), has one foot in via Sagittarius Mines Inc (SMI), a member of the consortium that has the right to operate the Tampakan Copper and Gold Project in South Cotabato in Mindanao.

The SM group, owner of the country’s largest chain of shopping malls, was assigned a seat in the 7-man Indophil Resources NL board by Alsons Consolidated Resources, a conglomerate owned by the Alcantara group. Indophil, an Australian exploration company has a 37.5% stake in the Tampakan mine project.  

The minority shares of Sy-led BDO in Indophil was reportedly part of the agreement for the long-term loan that BDO extended to Alcantara-led Alsons, said a Business Mirror report, which also cites Jose Sio, chief financial officer of the Sy-led holding firm SM Investments Corp (SMIC), that it is typical for BDO to request a board seat if the loaned amount is substantial.
Early this year, the Alsons group hiked its stake in Indophil to 19.99% -– up from 3.5% — by infusing US$99.4 million after a failed bid to sell its stakes to Zijin Mining Group of China 3 years ago. Business Mirror said it was BDO’s loan that funded Alsons group’s purchase of more shares in Indophil.

Xstrata Copper, a subsidiary of Swiss global miner Xstrata Plc, holds the majority stake at SMI at 67.5%.  Xstrata Plc itself is in merger talks with Glencore International Plc.

Xstrata Plc is the world’s largest copper producer.  If its merger talks with Glencore, which owns Pasar Corporation, push through, the merged company could become one of  the Top 2 biggest mining companies in the world.

Exercising option

The SM group could exercise its option in Indophil to acquire the latter’s mining interests in the country.

Aside from SMI, Indophil holds substantial exposures in other mining projects in the Philippines. Among them are the Itogon Gold Project in Benguet, the separate copper and gold projects in Buda and Mt. Kinabalin in Bukdinon and the Bunawan Gold Project in Agusan del Sur.

Both Indophil and Alsons were in serious talks to sell their stakes in SMI following serious corporate rift with Xstrata Plc which attempted a friendly takeover of the firm in 2008.  The proposed buyout however failed as Indophil shareholders rejected the offer of the Switzerland-based mining company.

Xstrata gained majority control over SMI after it exercised its option in 2007.  Prior its majority acquisition of SMI, Xstrata provided Indophil the financing to conduct drilling and exploration activities in the remote mountain villages in Tampakan, South Cotabato and neighboring towns of Columbio in Sultan Kudarat, Kiblawan in Davao del Sur and Malungon in Sarangani.

From over 100,000 hectares of exploration area, SMi is now down to a little less than 20,000.

Last year however, SMI said it is further trimming down its mineral development site to less than 4,000 hectares – all concentrated in Tampakan.

The Tampakan project is touted as having the world’s largest untapped copper and gold deposits with a potential annual average production of 375,000 tons of copper in concentrate for at least 17 years from 2016.   

SMI however last month announced it is moving its production target year to 2018 following the rejection of environmental clearance certificate (ECC) application in part because of strong opposition from the local Catholic Church and environmental groups.

The Philippine’s Environmental Management Bureau however cited an existing provincial ordinance that bans open pit mining in South Cotabato in denying the ECC application of SMI.

SMI is hoping that the new mining policy of President Bengino Aquino III will overturn the controversial provincial ordinance. –

Read the Blog on the 2012 Mining Conference for a blow-by-blow account of issues being discussed.

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