SOUTHERN COMFORT: Xstrata-SMI’s proxy war

GENERAL SANTOS CITY (MindaNews/05 December) — Without doubt, Sagittarius Mines Inc. (SMI) will be watching very closely, and with good reasons, the case filed by Canadian-backed mining company TVI Resource Development Inc. against the provincial government of Zamboanga del Norte, in which the Zamboanga-based mining firm is questioning the legality and constitutionality of a local ordinance banning open pit mining in the province.

Hailed by Makati businessmen and mining executives, TVI is fearlessly journeying into an unchartered territory its counterpart in Tampakan, South Cotabato was first faced with but never dared to tread.

A court ruling that will go against TVI could spell disaster to large mining firms positioning to extract and exploit the country’s rich mineral resources using a method that is viewed by anti-mining activists and environmentalists as destructive and inimical to the environment.

SMI is facing the same legal predicament.

The Xstrata-owned mining firm currently holds the Columbio Financial Technical Assistance Agreement for the Tampakan Copper and Gold Project located principally in South Cotabato, touted as the largest untapped copper and gold deposits in Asia.

SMI, in fact, may just be waiting, if not abetting, for anyone who is willing to take the cudgels for them in questioning the authority of local government units to pass ordinances that prevent mining companies from operating mining businesses in their respective areas.

The provincial government of Zamboanga del Norte passed its ordinance banning open pit mining only in August this year.

The provincial government of South Cotabato actually was the first local government unit in the country to do so, in March 2010, when it voted to ban open pit mining in the province.

Yet, SMI never showed any intention nor the desire to have the court decide the fate of its multi-billion dollar business venture despite the fact that it faces the danger of not being able to obtain the necessary business permits and local government clearances it will need to obtain the mandated environment clearance certificate and other government regulatory licenses.

During one of its public consultations this year, a mid-level company executive said the company is of the opinion that the Philippine government, being one of the principals in the FTAA contract, should be the one questioning the constitutionality of the local ordinance.

The SMI executive said they are only “contractors” by virtue of the FTAA and the mine is actually still a public domain.

It was a hollow line of argument but a convenient excuse nevertheless against ending up being rebuked legally if the South Cotabato provincial government is upheld by the court.

Local government secretary Jesse Robredo earlier tried but failed to arm-twist the provincial government by pressuring the latter into reviewing and eventually revoking the ordinance.

South Cotabato Gov. Arthur Pingoy has gone on record to say that unless prevented by the proper courts or until the Sangguniang Panlalawigan (Provincial Board) amends the ordinance, he is duty-bound to implement the local legislation banning open pit mining in the province.

The Philippine mining industry will be watching and following the case filed by TVI.

No doubt SMI is now also doing so.

In fact, it may have already sent its legal representatives to confer with the lawyers of TVI.

This is will be one hell of a proxy war for SMI. (Edwin G. Espejo writes for