Xstrata unit defers start of Tampakan mining operations to 2019

MANILA, Philippines – Sagittarius Mines Inc. (SMI), the local arm of Swiss miner Xstrata Plc. will push back to 2019 the start of commercial operations at the US$5.9 billion Tampakan project, potentially the single biggst foreign investment in the country. 

In a statement on Wednesday, December 12, Xstrata-SMI said they submitted an updated project development plan for the copper-gold mine project to the Mining Industry Coordinating Council (MICC), stressing that the company will potentially start construction in 2015, enabling commercial operations in 2019.

This is the 3rd time that SMI is moving the project’s potential start of commercial operations. Earlier this year, SMI twice announced that operations of the Tampakan project will start in 2016 then moved to 2018.

The latest announcement follows the Aquino government’s release of a mining policy, as well as the long-pending legal and environmental issues between the local and national governments affecting Tampakan’s open pit mining.  

Challenges

SMI president Peter Forrestal cited the mining project’s various challenges, including security and the conflicting laws. 

“The (Tampakan) project has experienced a number of challenges since we submitted our Mine Project Feasibility Study. These have included restrictions on field activities resulting from security issues in the project area; the need to reconsider our preferred power supply options for the project; the on-going uncertainty created by a provincial ordinance that is in conflict with national law and the denial of the Environmental Compliance Certificate (ECC) by the Department of Environment and Natural Resources,” Forrestal said in a statement.

The Tampakan project has been in a wave of issues and controversies the past months with violence errupting in the area that killed members of one of the indigenous communities in the site, the B’laan tribe as well as the Mines and Geosciences Bureau’s (MGB) rejection of the company’s application for an ECC.

MGB cited a local ordinance banning open-pit mining in the province of South Cotabato as the reason of their rejection of the company’s ECC application.

Community support

Forrestal remains hopeful that the local communities will support the project despite the delay.

“Given strong local community support, if local government endorsement and final approvals from the national government are forthcoming, then subject to an investment decision by SMI’s shareholders, commercial production (can commence) in 2019,” Forrestal said.

“SMI has been working for more than 10 years with the affected communities, and remains committed to obtaining a social license to develop the (Tampakan) project,” Forrestal said.

Last November 29, the Department of Justice (DOJ) issued their opinion saying that the provincial edict is against national laws. This gives Xstrata-SMI or the Department of the Interior and Local Government (DILG) the option to file a case in court invalidating the effectivity of the provincial ordinance.

The Tampakan copper-gold mine project will contribute at least 1% to the country’s GDP per year of operations, the miner’s supporters have stressed. – Rappler.com