$5.9-B mine project fails to get ECC | Inquirer Business

$5.9-B mine project fails to get ECC

/ 01:21 AM January 14, 2012

Global miner Xstrata Plc’s  Philippine unit said on Friday it was “extremely disappointed” with a government decision not to clear for now its planned $5.9 billion copper-gold Tampakan project, potentially the biggest in Southeast Asia.

Sagittarius Mines Inc. (SMI), operator of the Tampakan project and partly owned by Australian miner Indophil Resources NL, will appeal to the Department of Environment and Natural Resources (DENR) to reconsider its decision, which it said contradicted the government’s earlier stance that the national law was superior to local policies.

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The target is for the mine to begin commercial production by 2016. It is touted to be the single largest foreign direct investment in the Philippines.

But the project, which will use open-pit mining to extract the minerals, is under threat from a local ban on the method deemed harmful to the environment by officials of the South Cotabato province.

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SMI failed to obtain an environmental compliance certificate (ECC) for the project due to an open pit ban in South Cotabato, one of the host provinces. SMI said it had received official notification from the DENR denying its application for an ECC pending resolution of the ban.

‘Lack of consistency’

“SMI intends to immediately file an appeal for a reconsideration of the decision as permitted under the ECC application process,” Sagittarius president Peter Forrestal said in a statement.

“We believe this decision sets a precedent that contradicts the publicly stated views of the Aquino administration—namely that national laws which permit open-pit mining methods should have precedence over conflicting provincial ordinances.”

Forrestal said such a “lack of consistency by the national government poses a very real threat to investment confidence in the Philippines and introduces significant uncertainty to national government approval processes.”

Forrestal also said: “We are concerned this decision was not made on the merits of our mine project Environmental Impact Statement (EIS), which fully complies with the requirements of the DENR’s own ECC process and is backed by a world-class environmental impact assessment study.”

High international standard

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Indophil, which has a minority stake in Tampakan, said that it seeks “to improve the operating structure and effectiveness of SMI,” although it believes the EIS process led by SMI was of the highest international standard and even went beyond legislative requirements in the Philippines.

An independent panel of experts established by the government’s own Environmental Management Bureau was apparently satisfied with the EIS and the issues it addressed.

Temporary delay

“We believe that this delay can be overcome in the near term with the support of our Philippine corporate shareholders, and a committed and aligned response from Xstrata and Indophil,” Indophil CEO Richard Laufman said in a disclosure to the Australian Securities Exchange.

At the same time, Indophil said it was speeding up moves to establish its presence in the Philippines via a public listing. Laufman said Indophil would accelerate moves to seek the additional listing of Indophil on the Philippine Stock Exchange.

“This will make Indophil the first dual Australia-Philippines publicly listed company and provide more direct involvement and access to Philippine investors,” Laufman said.

Up to the courts

Environment Secretary Ramon Paje has said that while the open pit ban looms over the Tampakan project, it is practically useless to issue an ECC. He said this is because the ECC takes into account the applicant’s mining technology (open pit or underground mining) and the preparations that go with it.

“If there is even a small chance that the open pit ban may be fully implemented, the mining company may not be able to use the ECC anyway if it was issued based on the use of that technology,” Paje said.

As to whether the open pit ban is legal and can be enforced, Paje said the government has already issued an opinion that it is against national laws and that the courts will then have to decide the legality of the ban.

Chamber of Mines

The Chamber of Mines of the Philippines said it was “concerned” the ECC denial would send “mixed signals” to investors.

“Unless a clear-cut policy on mining is immediately formulated, local ordinances such as that in South Cotabato, which bans the open-pit mining method, will be a recurring issue that would hinder efforts to revitalize mining and deprive the Filipino people of the economic benefits that can be derived from its world-class mineral resources,” the industry group said.

The Tampakan project straddles the municipality of Tampakan in South Cotabato, Kiblawan in Davao del Sur province, and Columbio in Sultan Kudarat province.

In June 2010, the outgoing provincial government of South Cotabato passed an ordinance banning open-pit mining just before turning over the reins of the local government to a new set of leaders. Other provinces, such as Zamboanga del Norte, have since passed similar ordinances.

Ban is challenged

In Zamboanga del Norte, at least, the ban has been challenged in court. Mining company TVI Resource Development (Phils.), Inc. (TVIRD), whose operations in Canatuan mine may be cut short, has questioned the constitutionality of the ban in Zamboanga del Norte.

No such legal case has been filed in South Cotabato by any miner or other parties as talks between the project stakeholders, community leaders and local government continue.

The Philippines aims to earn $18 billion in aggregate mining investments by 2016, according to the DENR.  With a report from Reuters

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TAGS: Australian miner Indophil Resources NL, chamber of mines, environmental compliance certificate (ECC), Global miner Xstrata Plc’s Philippine unit, open pit mining, Sagittarius Mines Inc. (SMI), Tampakan project
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