GENERAL SANTOS CITY, Philippines – The contractor for the $5.9 billion Tampakan copper-gold project is facing further delays due to concerns over a large-scale international mining merger.
Sagittarius Mines Inc. (SMI) earlier set a target to start commercial operations for Tampakan in 2019. The start date, which was initially set for 2016, was moved back due to difficulties in obtaining licenses and permits.
Now SMI may encounter more delays to the repeated deferment of the merger between commodities trading firm Glencore and global mining giant Xstrata Plc.
In a report aired on Monday, April 1, the Australian Broadcasting Corporation (ABC) said that the merger between the two giant Anglo-Swiss companies was moved further to May as concerns over their combined global market continue to give China jitters.
The anticipated US$76 billion union between Xstrata Plc, the world’s fourth largest copper producer, and Glencore will make them the world’s fourth largest diversified mining company. The merger will also make the two companies the world’s largest commodities trading firm.
The merger was first announced in February 2012. In March 2013, both companies announced that the union was to be formalized in April after it did not push through on March 15.
The Glencore-Xstrata union is so huge several countries raised concerns, among them Qatar and South Africa. But after hurdling obstacles from regulators from both countries, it is yet to obtain approval from the Chinese government.
China is the world’s largest consumer of copper concentrates and it is raising concerns over the market dominance of the merged companies in the trade of copper concentrates.
Xstrata Plc has a 62.75% stake in SMI. XStrata Plc also owns the Tampakan Copper and Gold project through its Australia-based subsidiary Xstrata Copper.
The possible union between Glencore and Xstrata could cause a major shake-up in the top management of SMI. Xstrata Plc chief executive officer Mick Davis earlier said that the deal is already “a takeover and no longer a merger.”
The possible deal also affect the marketing strategy of SMI since Glencore owns the Philippine Associated Smelting and Refining Corporation (PASAR), the country’s sole copper smelter and refinery plant. The facility is located in Leyte.
SMI said that it would export copper concentrates to Australia where it will be smelted and refined. The mining company had already pushed forward its planned commercial production from 2016 to 2019 following delays in securing government permits.
In February this year, it finally was granted an environment compliance certificate although it still needs to get the approval of host local government units.
In 2010, the local government of South Cotabato passed an ordinance banning open pit mining in the province. Re-electionist Gov. Arthur Pingoy and his closest rival Rep. Daisy Avance-Fuentes have vowed to implement the ordinance “unless ordered by the court.”
SMI has already declared it will employ an open pit mining method to extract copper and gold ore deposits in its mining site in the remote mountain village of Tablu in Tampakan, South Cotabato.
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. – Rappler.com
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