Philex drops Tampakan bid

MANILA, Philippines—Philex Mining Corp., the country’s biggest mining company, is no longer keen on acquiring a stake in the $5.9-billion Tampakan copper gold project in South Cotabato, due to the “complex issues” surrounding it.

According to Philex CEO Manuel V. Pangilinan, the ban on open pit mining imposed by the provincial government, among other issues, has largely hampered and stalled the development of the mining project.

Instead, Philex has decided to focus its resources on mining projects that it controls and which it can readily develop and will be ready when its Padcal mine in Benguet would run out of minerals.

Padcal was estimated to have a mine life until 2019 or 2020, unless it can be further extended by Philex.

“We’re focused on the Silangan copper gold project, which is entirely within our control. We’d like to pursue that because that’s the low-hanging fruit for us. We’re in control of the timetable, the processes, the expenditures, and so forth (for that),” Pangilinan explained.

Philex is preparing to spend $1.8 billion (about P81 billion) to develop and start production at the new Silangan mine in Northern Surigao. Of the amount, $600 million to $800 million would be used for the development of the mine from 2012 up to late 2015. Another $1 billion will be needed to sustain the operations over the estimated 20-year mine life at the Silangan prospect

“With respect to the planned joint venture with Manila Mining (for the development of the Kalayaan gold copper prospect), that is also largely within our control. If the survey results are good, as it is good in the case of Silangan mine, then we can proceed,” Pangilinan added.

Philex earlier reported that it was interested in acquiring the 37.5-percent stake of Indophil Resources NL in the Tampakan copper gold project.

Indophil currently owns 37.5 percent of Sagittarius Mines Inc. (SMI), the local company working on the Tampakan project in South Cotabato. The remaining 62.5 percent in SMI is held by Xstrata Copper.

This 37.5-percent stake, which San Miguel Corp. was earlier eyeing, has been up for sale since the $473-million buyout deal with Zijin Mining Group Co. of China was terminated due to “uncertainties.”

“It’s a big investment. It’s a big project. It’s a world-class mine and I believe that someday, it can get developed for the sake of this country. The (project’s) benefits to the community and the country are being overlooked. We’ve stoked fears about mining and it’s causing the project to be stalled unnecessarily,” Pangilinan said.

The Tampakan is reputedly the largest undeveloped copper and gold deposit in Southeast Asia and potentially the fourth-largest copper-gold project in the world. However, plans to proceed with the project has been delayed due largely to the opposition lodged by various groups and concerned local governments.

The Tampakan project is touted to bring in the largest foreign investment into the Philippines as the $5.9-billion investment only pertains to the development cost until the project reaches commercial production. The mine is expected to operate from 2015 to 2033.

Mark Williams, general manager of Xstrata’s local subsidiary SMI, earlier said that the Philippine economy also stands to reap as much as $40 billion within a 25-year period.