$5.9B Tampakan mine project pushed back to 2019

By Erik dela Cruz, Reuters

Posted at Dec 12 2012 06:31 PM | Updated as of Dec 13 2012 03:17 AM

MANILA - Global miner Xstrata Plc's Philippine unit has delayed by three years, to 2019, a target to start production at the $5.9-billion Tampakan copper-gold mine in the country's south, as it remains hopeful of winning approvals from regulators. 

Conflicting rules and a freeze on new mine deals in the Philippines are strangling development of the country's untapped mineral resources, estimated by the government to be worth $850 billion. 

The Tampakan project, which would be the Philippines' single largest foreign direct investment, has been held up by a 2010 ban on open-pit mining imposed by the government of South Cotabato province, the site of the mine.  

Sagittarius Mines Inc (SMI) hopes to start mine construction by 2015, two years later than scheduled, before production starts in 2019, the company said in a statement. It originally aimed to start production in 2016. 

So long as the project received local government endorsement and final approvals from the national government, it would go ahead, subject to an investment decision by shareholders, SMI President Peter Forrestal said. 

"Construction could potentially commence in 2015, enabling commercial production in 2019," he added. 

Sagittarius has had problems getting approvals from the mining regulator for Tampakan because of the ban, which contradicts a national law that is silent on mining methods. 

Sagittarius is also partly owned by Australia's Indophil Resources NL , in which Philippine conglomerate San Miguel Corp has a stake of 10 percent. 

The Tampakan mine is estimated to contain 15 million tonnes of copper and 17.6 million ounces of gold. 

As a result of the Philippine mining imbroglio, investments in the sector over the next four years are likely to be less than half the $12 billion originally forecast, state regulator the Mines and Geosciences Bureau has said. 

In October, President Benigno Aquino said he wanted Congress to first pass legislation to raise state revenues from mining and put in place environmental safeguards before issuing new mining permits, including those for the Tampakan mine.