MELBOURNE/MANILA - Glencore Xstrata plans to sell its majority stake in the $5.9 billion Tampakan copper and gold project, its partner in the long-delayed Philippines joint venture said on Thursday.
Glencore, with a 62.5 percent stake in the project, has made clear it has little appetite for spending billions on building new mines, and previously flagged it was reviewing its Tampakan holding along with a range of other big-ticket projects.
"Glencore Xstrata has advised Indophil of its preference to pursue divestment of its interest in Tampakan," Indophil Resources Chief Executive Richard Laufmann said in the group's quarterly report.
Glencore declined to comment on Indophil's statement.
Laufmann said no formal sale process has begun but discussions are going on, including informal talks with Indophil, which has a pre-emptive right over Glencore's interest in the project.
Indophil, which owns the remaining 27.5 percent stake in Tampakan, did not rule out divesting it, potentially clearing the way for a full takeover of the challenging project in a troubled region of the southern Philippines.
"Indophil remains committed to maximising value either by development of Tampakan, 100 percent ownership of SMI or divestment," it said, referring to the project's operating arm, Sagittarius Mines Inc.
Exiting Tampakan would help Glencore meet a requirement to sell down copper stakes, imposed by China as a condition for approving Glencore's takeover of Xstrata last year, as Beijing feared the commodities firm would gain too much power in copper.
Glencore is in the process of trying to sell its $5.9 billion Las Bambas copper project in Peru and has agreed to sell its majority stake in a copper project in Papua New Guinea for $125 million.
If it were unable to sell Las Bambas, it would have to sell Tampakan to meet Beijing's conditions.
Tampakan has been a challenging project for Sagittarius Mines, hampered by a provincial ban on open-pit mining that has been in place since 2010, although it runs counter to the national mining policy.
The ban imposed by the South Cotabato provincial council has made it difficult for Sagittarius to get necessary approvals for the project, thus forcing it to revise its work plan and delay by three years, to 2019, its target to start production.
The delay in what could be the biggest single foreign direct investment in the Philippines has resulted in massive jobs and spending cuts for Tampakan.
Discovered in 1992, the Tampakan mine is predicted to have a 17-year lifespan with estimated deposits of 15 million tonnes of copper and 18 million ounces of gold.