Open pit mine ban to hit TVI projects, Philex plan in Zamboanga Norte

MANILA, Philippines—Zamboanga del Norte has issued an ordinance banning open-pit mining in the province, threatening projects of mining firms operating in the area, such as those of TVI Resource Development.

The ordinance, according to Mines and Geosciences Bureau (MGB) Director Leo L. Jasareno, was published in local papers on Friday.

Also threatened is the plan of Philex Mining Corp., the country’s biggest miner in terms of capitalization, to explore the possibility of reviving the Sibutad project in Zamboanga del Norte.

The Sibutad copper-gold project was shelved in early 1999 due to low gold prices. Now that gold prices in the world market have been rising, the company is studying the viability of reviving the project.

Open-pit mining is also known as opencast, open-cut and strip mining. The ban on open-pit mining in the province is seen directly affecting TVI, which operates the Canatuan copper mine in Siocon municipality. TVI is also exploring the Balabag property and has several tenements and working agreements in Zamboanga del Norte.

Jasareno said in a phone interview that the open-pit mining ban would affect not only the individual companies and those that have been depending on their projects for livelihood but also the national economy.

“TVI is a major copper producer so the direct impact on our metallic mineral production target is huge,” Jasareno said. “This also affects our investment target because ordinances such as this send conflicting signals to investors. Many of them are saying the national and local governments do not seem to agree on investment policies, particularly when it comes to mining.”

Government figures for the first half of 2011 show 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.

Zamboanga del Norte’s ordinance is said to be more severe than that of South Cotabato, which threatens the $5.9 billion Tampakan copper-gold project.

Jasareno said the government agency would ask the local government of Zamboanga del Norte to reconsider the ordinance and “try to communicate how the move diverges from the Mining Act as well as the national policy, both of which allow open pit mining.”

“Zamboanga del Norte has a lot more mining potential but it is possible the local government fears that open pit mines cannot be rehabilitated. The industry and the national government may have to communicate the rehabilitation process as well as the impacts (of mining projects),” Jasareno said.

The ordinance in Zamboanga del Norte allows non-government organizations to make citizens arrest for environmental crimes.

The ordinance also prolongs the application process. Under the Mining Act of 1995, mining companies seeking government permit for mining projects must have consultations with the Sangguniang Panlalawigan or provincial assembly. Presently, it is enough for the applicant to present proof of consultation from the assembly to satisfy national regulation. The ordinance in Zamboanga del Norte adds another step by requiring the mining company to get the proof of consultation approved by the provincial governor before submitting it to the Mines and Geosciences Bureau, an attached agency of the Department of Environment and Natural Resources.

The Philippines’ potential mining wealth was estimated to reach $840 billion or 10 times the country’s annual gross domestic product, according to data from the Chamber of Mines of the Philippines (COMP).