Delay seen to Xstrata's $5.9B Tampakan project
MANILA - Global miner Xstrata Plc's plans to start a $5.9 billion copper-gold project in the southern Philippines by 2016 faces a delay of at least 12 months after the country's president demanded on Wednesday the passage of a mining reform bill first.
The southern Mindanao region is bracing for a possible investment boom after the government and the country's largest Muslim separatist group signed a peace deal this week, ending more than four decades of conflict.
Foreign interests are eyeing projects in power, manufacturing, agriculture and mining.
But the largest prospective foreign direct investment in Mindanao, as well as in the Philippines, is likely to be delayed as the government wants to first pass legislation that seeks to raise state revenues from the mining sector and ensure environmental safeguards.
"That seems to be the more prudent way," Aquino told foreign journalists when asked if Manila would delay its decision to approve Sagittarius Mines Inc's application for environmental clearance for Southeast Asia's largest gold and copper prospect.
"I don't have that confidence at this point in time that existing laws do adequately protect our environment," Aquino said on Wednesday.
It could take more than a year before the mining bill is passed into law, as the current Congress effectively has only about one working month left, taking out holiday breaks, before it adjourns ahead of mid-term elections in May. The next Congress will start its sessions in July.
Xstrata has said it may delay its planned 2016 start of production at the Tampakan mine in South Cotabato province, estimated to contain 15 million tonnes of copper and almost 18 million ounces of gold, with construction alone to take 2 to 3 years to be completed.
Sagittarius, a unit of Xstrata and part-owned by Australian miner Indophil Resources NL, has asked Aquino to reverse the Environment Department's decision not to issue the clearance for the project until a provincial government ban on open-pit mining is lifted.
Aquino will next week visit Australia where mining issues such as the Tampakan project are expected to be discussed.
Sagittarius said in an email reply to Reuters that mine construction would hinge on government approvals, as well as a decision by shareholders on whether or not to push through with the planned $5.9 billion investment in the Philippines.
"Issuance of the mine ECC (environment compliance certificate) would provide tangible evidence of the Philippine government's commitment to the project and willingness to abide by the terms and conditions of Sagittarius Mines' FTAA (Financial and Technical AssiStance Agreement) contract," Sagittarius said, referring to the mining permit issued for large-scale projects with capital of at least $50 million.
Environment and Natural Resources Secretary Ramon Paje said mine waste leaks in August at the open-pit gold-copper project of top miner Philex Mining Corp in the northern Philippines has convinced the government it should not rush approval of mining projects.
But he says the government remains committed to the Tampakan project.
Apart from Tampakan, there are other foreign investors considering mining projects in Mindanao, which holds a third of the Philippines' estimated $850 billion worth of mineral wealth.
That interest is expected to build after Manila signed a peace deal with Muslim rebels, said Gregory Domingo, trade secretary.
"Upon the announcement of this peace agreement, a lot of people approached us. I've seen several ambassadors already, they said 'Tell us what we need to do, we'd like to help Mindanao'," Domingo said.
"There are many who want to help in terms of aid as well as investments."
Ambassadors from India, Australia, France were among those he met with in recent days, Domingo said, adding Japan had also expressed interest prior to the peace deal.
"It's going to be in the hundreds of millions of dollars already in the pipeline," Domingo said when asked for the amount of investments in the works, adding new projects were likely to come within the next 12 to 18 months in the Mindanao region.
The government and Muslim rebels want to finish negotiations on details of the framework agreement by the end of the year, while a transition committee that will implement the deal has until 2015 to come up with a law on the new Bangsamoro entity in the Muslim-dominated areas in the country's south.
Aquino said he would issue an order soon to create the transition committee but he declined to provide details on issues to be taken up when talks resume in Kuala Lumpur next month, saying the two sides have reached a "broad consensus" on percentages in the sharing of revenues from natural resources.