Low metal prices, uncertainties stall Tampakan operation
GENERAL SANTOS CITY, Philippines – Australian exploration company Indophil Resources NL said on Friday, March 28 that low metal prices and market uncertainties have taken their toll on the planned commercial operation of the Tampakan gold and copper project.
In a report to the Australian Stock Exchange, Indophil chairman Brian Philips said prevailing world market conditions were further aggravated by the decision of its majority partner at Sagittarius Mines Inc. (SMI) to significantly reduce the operations of the controversial South Cotabato-based mining company.
The Swiss-based Glencore-Xstrata controls 62.5% of SMI, which owns the Tampakan project. Indophil owns the remaining 37.5%.
Glencore International took over control of Xstrata Plc following their merger in 2013 to form the world’s 4th largest diversified mining company.
Following the takeover, Glencore-Xstrata decided “to proceed with a heavily-reduced work plan, significantly reducing expenditure on Tampakan,” Philips said in his report.
Glencore-Xstrata’s ownership over SMI likewise “became subject to conditions set by the Chinese government’s Ministry of Commerce (MOFCOM) as part of the merger approvals.”
Among the conditions set by the Chinese government was the sale of the already operating Las Bambas copper project in Peru or the Tampakan mine. The sale of Las Bambas has not been completed as of this writing.
“These conditions have complex ramifications that are affecting all of our interests, and they introduced significant uncertainty for the project and its owners/managers,” Philips disclosed further.
Looking to divest
In October last year, Indophil CEO Richard Lauffman said Glencore-Xstrata advised Indophil of the former’s preference to divest from SMI.
Indophil however said Glencore-Xstrata has not formalized the process.
“No agreement on how to move forward has been reached with Glencore-Xstrata,” Indophil said.
Indophil said it was willing to proceed with the Tampakan project alone or in partnership with interested investors.
An Indophil source, who requested not to be named, last year said they preferred Filipino partners in the event Glencore-Xstrata exits the project.
As minority partner, Indophil holds the right of first refusal to Glencore-Xstrata's stake.
At present, 30% of Indophil’s stake in SMI belongs to Filipino corporations led by Alcantara and sons, PLDT, San Miguel Corporation and SM Prime Holdings.
In addition, SMI also faces strong resistance from the local Church in South Cotabato and is stymied by a provincial ordinance banning open pit mine in the province.
Although it had already secured an environment compliance certificate, SMI is still required to secure the approval of host local government units and communities.
Last year, however, a respected tribal leader was slain by suspected government militiamen in Columbio, Sultan Kudarat.
Blaan tribe elder Anting Freay, who was killed outside his house, was an uncle of fugitive Daguil Capion. Anting’s son Victor was also killed several meters away from his house.
Capion is a tribal leader who is leading a group of Blaan tribesman who took up arms against SMI. Capion has admitted joining forces with the communist-led New People’s Army, who also vowed to resist the mining operation of SMI.
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 concentrate for at least 17 years. – Rappler.com