Lifting ban on Philippines' Tampakan mine unlikely -governor

Reuters News
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Posted: Jul 12, 2012 6:44 AM
Lifting ban on Philippines' Tampakan mine unlikely -governor

By Erik dela Cruz

MANILA (Reuters) - The Philippine province where a joint venture of Xstrata Plc wants to develop a $5.9 billion copper and gold mine is unlikely to lift its ban on the project, the governor said on Thursday, days after the government issued new mining rules.

South Cotabato Governor Arthur Pingoy told Reuters that Sagittarius Mines, owned by the global miner and Australian mining firm Indophil Resources, may have to go to court to end the ban on open-pit mining, the method to be used at Southeast Asia's biggest copper and gold prospect in Tampakan.

An executive order issued by President Benigno Aquino this week that sets guidelines for the mining industry had raised hopes among investors that the Tampakan project would finally get the go-ahead.

"There's nothing in the executive order that tells us to lift the ban," Pingoy said in a telephone interview. "So I think only the courts could resolve the Tampakan issue."

Sagittarius Mines had hoped to start commercial production at Tampakan in 2016 but the ban has delayed construction almost two years, depriving the project of environmental clearance.

Asked about the possibility of going to court, Sagittarius spokesman John Arnaldo said the company was still hopeful it could overturn the ban.

"There's always the judicial option. It's a realistic option but is not our preferred option," he said.

MINING UNCERTAINTY

Tampakan, which has a 17-year lifespan, is believed to be the largest mine in the Philippines, a country that sits atop an estimated $1 trillion worth of mineral wealth. But the mine has faced strong opposition from environmental groups and the influential Catholic Church.

The mine is estimated to contain 15 million tonnes of copper and 17.6 million ounces of gold. It is the biggest of several mining projects expected to bring in up to $12 billion in new investments to the Philippines in five years.

Aquino's executive order aims to eventually lift a moratorium on new mining projects and raise government revenues from mining.

But the government, aiming to boost mining revenue, said it would not grant permits for new mining projects until Congress approved a proposal to impose an additional royalty on industry operators.

These royalties could be between 5 and 7 percent on top of an existing excise tax of 2 percent on new mining projects, government officials said.

Some lawmakers have said they would support the swift passage of the royalty proposal in Congress if Aquino makes it a priority, a step he has yet to take.

Several foreign business associations said in a statement no company would make big investments in mineral exploration without a clear idea of the fiscal regime and certainty on rules.

The Makati Business Club, which groups the country's biggest companies, also urged Congress to finalise the mining proposals this year if the government wants to attract foreign investors.

(Reporting by Erik dela Cruz; Editing by Rosemarie Francisco and Miral Fahmy)