Sy eyes majority stake in Tampakan project

The group of tycoon Henry Sy is keen on scaling up its stake in mining—notwithstanding a challenging local regulatory and global commodity environment—by acquiring a majority stake in Mindanao’s vast Tampakan mine, touted as Southeast Asia’s biggest untapped gold-copper reserve.

In an interview with the
Inquirer on Friday night, SM Investments Corp. chief finance officer Jose Sio confirmed ongoing talks for the SM group to invest in the Tampakan mine, now controlled by the Alcantara family following the pullout of Swiss multinational commodity trading and mining firm Glencore Plc last year.

“There are discussions,” Sio replied when asked about rumors that SM had bought into the project, adding that no deal had been finalized yet.

Sio said the group was interested in investing in natural resources. “If the global economy moves up, there will be demand for natural resources,” he said.

Asked whether it was a majority stake that the group was looking into, Sio said: “It has to be, because foreigners, when they come in here and they want to go into natural resources, they also want majority.”

Sio also said it was possible that the SM group would not use any of its listed companies to take over the project. To recall, the SM group also invested in Atlas Consolidated Mining and Development Corp. a few years ago, coming in as a partner of the Ramos family.

As the Tampakan project last year reverted to Filipino hands, this also opened up the possibility for the Alcantara group to bring in as its partner a group with strong financial muscle and a very long-term view on this investment.

Sagittarius Mines Inc., the owner of the Tampakan project, used to be 62.5-percent owned by Glencore while the remaining 37.5 percent was owned by Indophil Resources NL, which is, in turn, controlled by the Alcantara group through Alsons Prime Investments Corp. (Apic). Glencore’s exit allowed the Alcantara group to consolidate its control of the Tampakan project by exercising its right of first refusal.

The Tampakan mining project is located about 50 kilometers north of General Santos City, a major growth center in Mindanao. The city is accessed by highways, a major deep water port and an international airport with the capacity to take commercial aircraft. The Tampakan site is estimated to contain 15 million tons for copper and 18 million ounces of gold.

While mining for now is but a small portion of the SM group’s investment portfolio—and even deemed as a noncore interest—the prospective investment in Tampakan could catapult the Sy family into a major mining player.

“The scale of the mine itself will enable SM to become a regional or even a global player in the mining sector. It’s a single asset to start but big,” said Jose Mari Lacson, head of research at fund management firm ATR Asset Management. “It will be a source of long-term cyclical growth and more importantly, allow the group to become an exporter. SM will earn dollars for the economy as opposed to using dollars.”

At present, however, the regulatory environment in the Philippines does not favor mining. The incumbent Environment Secretary Gina Lopez, is a staunch antimining advocate. Lopez has particularly cited the open pit mining in Tampakan as a project she would not allow under her watch.

The Chamber of Mines of the Philippines counts the Tampakan project among the local mines expected to start within the next five to 10 years. It is expected to bring in total investments of $23 billion or about P1 trillion.