Glencore-Xstrata selling Tampakan stake

GENERAL SANTOS CITY, Philippines – World mining giant Glencore-Xstrata is confirmed to be preparing to sell its stake in the controversial Tampakan copper-gold project in South Cotabato, according to a report to the Australian Stock Exchange by its minority partner Indophil Resources NL.

“Glencore-Xstrata has informed Indophil of its preference to divest its stakes in Tampakan. This is consistent with Glencore’s preference not to develop greenfield projects,” Indophil chief operating officer and managing director Richard Lauffman said in his 4th quarter 2013 report.

This development is still being discussed by the parties and Lauffman said “no formal divestment process has commenced.”

At 62.5%, Glencore-Xstrata controls Sagittarius Mines Inc. (SMI), operator of the Tampakan project. Indophil owns the balance of 37.5%.

Indophil holds the right of first refusal should Glencore sell its SMI stake.

Lauffman said Indophil is committed to “maximizing the value” of its own shares in SMI by either developing the Tampakan project or also divesting from it. “In line with this, and conscious of the value of Indophil’s preemptive right, the company is sole-funding work programs at Tampakan.”

In 2012, Glencore International acquired Xstrata Plc in a mammoth US$75-billion takeover deal and, in the process, created the world’s 4th-largest diversified mining company.

The deal hit a brief snag when the Chinese government required Glencore to sell some of its copper mines for fear that it was getting monopoly of the world copper market.

Glencore agreed to sell its Las Bambas project in Peru and listed Tampakan as among other possible assets it would sell.

The Tampakan project, which could be the biggest single foreign direct investment in the Philippines, has faced delays due to regulatory issues.

A ban on open-pit mining, the method to be used in Tampakan, has been in place in South Cotabato since 2010.

SMI earlier announced it would commence commercial operations in 2019, but this is likely to be pushed back again.

Last year, SMI cut down its operations, retrenching over 920 workers and employees, including senior managers and superintendents. SMI also auctioned off more than 30 vehicles and office equipment, and moved to a smaller office.

Indophil said SMI retained only 60 employees and another 60 contractors and will work on a US$10-million budget in 2014, down from US$40 million in 2012.

An Indophil source said it will now solely fund the offsite new environmental impact study, “which has crossed in a work program from late 2013 into 2014. The study reportedly costs US$500,000.

Aside from the Tampakan project, Indophil has two other exploration projects in the Philippines. These are the Itogon Gold Project in northern Luzon and the Manat Gold Project in eastern Mindanao. – Rappler.com