Expenditure cut in Tampakan project hits P830-M

Expenditure cut in Tampakan project hits P830-M

KORONADAL CITY (MindaNews / 12 September) — Expenditure for the Tampakan copper-gold project for 2013 was slashed by P830 million due to the operational downsizing implemented by foreign-backed Sagittarius Mines, Inc. (SMI), which was triggered by the controversial open-pit mining ban imposed in South Cotabato province, among others.

In its 2013 first semester report released Wednesday, Australian firm Indophil Resources NL revealed that the revised work plan approved last month by SMI, developer of the Tampakan project, reduced whole year outlays to US$35 million or P1.5 billion at current exchange rate.

The full year expenditure cost approved by SMI last January was US$53.9 million or P2.3 billion at current exchange rate, it added.

Indophil owns 37.5 percent of the 40-percent controlling equity at SMI. The merged Glencore Xstrata plc holds 62.5 percent of the controlling equity.

The work plan was revised following Glencore International plc’s acquisition of Xstrata plc. The merger was announced on May 2.

“The essence of the [revised] work plan is to secure crucial government support on bottleneck issues prior to proceeding to final evaluation and possible development. There will be a particular focus on finding a resolution to the South Cotabato open-pit mining ban, the definition of the pathway to project approvals from all levels of government, and the gaining of consent and resettlement of impacted communities,” Brian Phillips, Indophil chair, said in the report.

On August 12, SMI announced it will be taking a new approach to the Tampakan project as part of an effort to place particular focus on a number of key challenges facing the project.

In a statement, Justin Hillier, SMI executive vice president, said that after consideration of a range of options presented by SMI management, shareholders have endorsed a revised approach for the project, with a renewed focus on enhancing collaboration with National Government partners and other stakeholders, to resolve the challenges facing the project.

“Over the past few months SMI has carried out a review of the project including an assessment of progress to date, ongoing and emerging challenges, and the current approach to advancing the project,” he said.

“The outstanding issues and challenges facing the Tampakan project include the resolution of the South Cotabato open-pit mining ban, the definition of the pathways to project approvals from all levels of government, and the gaining of consent and the resettlement of impacted communities,” Hillier said.

“With these challenges as yet unresolved, it has not proved possible to make adequate progress toward our project goals and, without a fundamental change in approach, progress is unlikely to improve in the foreseeable future. Therefore, it is timely for a change of approach to give the project every opportunity to progress in a reasonable timeframe,” he said.

South Cotabato, where the bulk of the Tampakan deposits are located, imposed the open-pit mining ban in 2010.

With the revised work plan, Hillier said they will work with the National Government and the Mining Industry Coordinating Council to address these challenges.

The plan will reduce current activity levels and expenditure on the project, and will result in staff downsizing and a reduction in the utilization of contractors, he added.

At least 900 workers would be affected in a three-phased retrenchment until October. Some 140 employees would be retained, according to SMI.

Since 2007, SMI has already spent some $500 million or P20 billion for the Tampakan project, earlier said John Arnaldo, the company’s spokesman who was among those retrenched.

Dubbed as the largest undeveloped copper-gold minefield in Southeast Asia, the Tampakan project contains an estimated 15 million metric tons of copper and 19.9 million ounces of gold deposits, according to the company’s latest study.

It is potentially the largest single foreign direct investment in the country with an estimated $5.9 billion capital requirement for the production stage targeted in 2019.

Comments

comments