TVI Resource Development (Phils.) Inc. (TVIRD), the Philippine affiliate of TVI Pacific Inc. of Canada, stands to lose $448 million in revenue if the Canatuan copper-gold mine closes prematurely due to an open pit mining ban in Zamboanga del Norte.
The ordinance took effect on November 6 after its publication in local papers. It gave TVIRD one year to wrap up the Canatuan project.
TVIRD said in a statement that it was challenging the ordinance in court for being “unconstitutional.”
However, if the ordinance is fully effected and Canatuan closes in November 2012, TVIRD will lose four years’ worth of revenue amounting to $448 million, according to the company.
The yearly gross revenue of the mine—located in Sitio (settlement) Canatuan, Barangay (village) Tabayo, Siocon, Zamboanga del Norte—was estimated at about $112 million, company data showed.
TVIRD also said that a “great part” of the revenue would have been spent on operating cost, royalty to IPs or indigenous people and community development.
The company also stands to lose $100 million in profit for four years of operations if Canatuan would be closed prematurely, TVIRD said.
Canatuan has two years of mine life left. However, no less than TVI Pacific chairman Clifford James said in September that the mine life could be extended by another two years since TVIRD had been exploring new ore sources around the existing mine.
About $8.9 million had been allotted for exploration projects in the Canatuan mines and nearby areas. This is part of the plan to extend the mine life, James said at a Philippine mining conference in September.
Of the said amount, at least 65 percent had already been spent, James said.
TVI had also allotted $10 million for exploration projects in 2012, focusing on the Zamboanga Peninsula, he said.
Government figures for the first half of 2011 showed that the Canatuan mine accounted for 13.54 percent of the Philippines’ copper metal production and 11.35 percent of copper content in concentrates. Canatuan also pitched in 0.35 percent of the country’s gold output and 27.53 percent of silver production.
Copper prices are rallying due to infrastructure projects in emerging economies and on market speculation that metal demand would rise further when European economies recover as a result of the rescue plan for Greece.
Gold prices have surged in recent years as global economic turmoil prompted investors to look for alternatives to the weakened US dollar, stocks and other assets. Demand for physical gold and jewelry in the emerging economies of India and China also pushed gold demand up.
Eugene T. Mateo, president of TVI Resource Development (Phils.) Inc., said in a statement Saturday: “It is business as usual in our operations in Canatuan mine in Zamboanga del Norte. There is no disruption despite the legal case we filed against the provincial government. We have the full support of the host community, the barangays, the IP (Indigenous Peoples) community and our host LGU (local government unit). TVIRD will not pull out. The company will fight this illegal and unconstitutional ordinance.”