Xstrata unit wins environmental approval for $5.9 billion Philippine mine
Author: Erik dela Cruz
A logo of Swiss mining company Xstrata is shown at their headquarters in Zug, November 13, 2012.
Photo: Michael Buholzer
Global miner Xstrata Plc's $5.9 billion Tampakan mine in the Philippines has been granted an environmental compliance certificate by the government, the company said on Tuesday, removing one of the hurdles delaying work on Southeast Asia's biggest copper-gold prospect.
The Tampakan project, the Philippines' single largest foreign direct investment and seen as a bellwether for overseas investors, has been held up by a 2010 ban on open-pit mining imposed by the provincial government of South Cotabato because of its harmful effects on the environment.
Governor Arthur Pingoy told Reuters there were no plans to revoke the ban, but the central government's environmental compliance certificate, or ECC, puts Xstrata a step closer to actual construction of the project if the ban is at all lifted.
The company, however, still needs at least three more local permits before construction work can begin.
"We received an official notification that the Department of Environment and Natural Resources has signed the ECC for our Tampakan mine project," Sagittarius Mines Inc, the local unit of Xstrata, said in a statement.
The Tampakan mine, predicted to have a 17-year lifespan, is expected to contain 15 million metric tons (16.5 million tons) of copper and 17.6 million ounces of gold. Australian miner Indophil Resources N.L. has a 37.5 percent interest in the project.
The ban by the South Cotabato government on open-pit mining runs counter to the national mining law, which does not restrict exploration methods.
The Philippines is estimated to sit on mineral deposits worth $850 billion and the government is keen to extract more revenues from the mining industry.
But a 2010 moratorium on new mining projects, and a strong anti-mining lobby led by the influential Catholic Church, some local government officials and environmentalists have hampered several multibillion-dollar projects.
"We have this ordinance banning open-pit mining that we consider until now as legal. Until this is declared illegal, I have to do my job to implement it," South Cotabato Governor Pingoy said by telephone.
A review of the ban is unlikely while Pingoy remains in office. Local elections are to be held in May in the Philippines, however, and that may usher in a more mining-friendly council.
Sagittarius has pushed back the target date to start production at the Tampakan mine in South Cotabato by three years to 2019 as it struggles to win regulatory approvals.
The project delay means actual mining investments between 2012 and 2016 will be short of a previous government forecast of $12 billion for the period.
Environment and Natural Resources Secretary Ramon Paje said the government had included certain conditions in the ECC granted to Sagittarius "in order to protect and mitigate possible adverse impacts of the project on the community health, welfare and the environment."
Sagittarius said it was reviewing the conditions.
Sagittarius had filed for an ECC in 2010, shortly before the local council of South Cotabato banned open-pit mining -- the extraction method the company plans to use.
Paje had previously said an ECC for the project cannot be issued while the ban was in place. But a mining council, overseen by President Benigno Aquino's office, ordered the environment department to grant Sagittarius the ECC if it had complied with all requirements.
(Reporting by Erik dela Cruz; Editing by Rosemarie Francisco and Miral Fahmy)