Pangilinan-led First Pacific to buy 3 gold mine projects

HONG KONG—Regional conglomerate First Pacific Co. Ltd., led by Manuel V. Pangilinan, plans to acquire three new mining projects, two of which are in the Philippines, as part of its ambition to grow its mining business into a medium-sized gold producer globally with annual gold output of one million ounces.

Speaking before the Earth Resources Conference on Thursday, Pangilinan said the group would like to grow its mining business outside of Philex Mining’s Padcal mine in northern Luzon, which the company has been mining sine the 1950s.

He said Philex has been targeting to put on stream the Silangan mine in northern Mindanao by 2016 and has been mulling opening an old gold mine “in the middle of the Philippines.”

At the same time, he said, the group would like to invest in two operating mines, including a gold mine producing 200,000 metric tons of ore each year. The prospective acquisition in Indonesia would be much bigger, he said.

Pangilinan said that despite the Philippines being one of the most mineralized countries in the world, mining has only had little contribution to the gross domestic product at 1 percent at present. He, therefore, saw its huge untapped potential to spur economic growth.

In terms of strategy, he said the group’s principal interest would be in gold and copper and its by-products. “We’re not so keen on iron ore or nickel as they are more volatile in terms of pricing,” Pangilinan said.

The businessman said the group favored dual metals because once by-products were removed, the cost of production would go down dramatically.

In Philex’ Padcal mine, the cost of production is at $86 per ounce as copper revenue credits offset some of the production cost.

Part of the consideration when First Pacific first invested in Philex in 2007, Pangilinan suggested, was the potential for the country to be a mining hub given the country’s huge mineral resources.

“We have no control of commodity prices. The Philippines, despite its potentiality, is a small producer of gold, copper and other metals and even if we were to shut down all of our mines today, there will be no impact on London metal prices at all,” Pangilinan said.

“So we want to become a major factor. If we can, we’d like to have one million ounces of gold to produce a year and become a medium-sized producer,” he said, adding that this goal would be supported by mining projects not just in the Philippines but in other countries.

By the start of Philex’s commercial operations of Silangan mine in 2016, Pangilinan said the First Pacific group would probably meet two-thirds of its ambition to hit one million gold ounces in global output target.

Silangan aims to produce about 35,000 metric tons of ore a day, adding to Padcal’s production of 25,000 metric tons of ore.

First Pacific, which used to have investments in the Netherlands, the US and Australia, now invests in only two countries—the Philippines and Indonesia. About 70 percent of its assets are invested in the Philippines.