MANILA, Philippines - The entry of San Miguel Corp. (SMC) into Australia-based Indophil Resources Inc. will pave the way for the revival of the Tampakan mining project in South Cotabato, a top mining official said.
Mines and Geosciences Bureau acting director Leo Jasareno told reporters at a recent forum that they expect all the issues related to Tampakan to be resolved with the entry of a local firm into the project.
“The entry of San Miguel changes the landscape in Tampakan. Since San Miguel is Filipino, this will probably address the issue about foreign participation. The cultural opposition to mining in Tampakan will be mitigated,” Jasareno said.
He noted that the deal between SMC and Indophil would benefit not only the government but also the communities where the mining projects are located.
“It should benefit everybody by tempering the situation because you now have Filipino investors. We have always advised foreign investors that the key to successful mining projects is having local partners,” he added.
“We would like to think that the entry of SMC would help appease those that are opposing the projects of Indophil,” he said.
“The 10-percent share purchase has already been firmed up as reported to us. However, it looks like that’s an initial transaction. SMC is still doing due dilligence. Indophil has reported that there’s an indication that SMC will buy more. There’s indication that eventually SMC will take the entire 37.5 percent of Indophil in Sagittarius Mines Inc. (SMI), the corporate vehicle for the Tampakan project,” he said.
SMC has entered into a share placement agreement with Indophil to subscribe to approximately 48 million new shares equivalent 10.1 percent of Indophil’s capital, for a total consideration of $40 million.
Indophil owns 37.5 percent of SMI, the operator of the world-class Tampakan copper-gold project in South Cotabato. The remaining 62.5 percent is held by Xstrata Queensland Ltd., the copper unit of global miner Xstrata plc.
The $5.2-billion Tampakan project hit a snag after the South Cotabato provincial government issued a rule banning open-pit mining.
Department of Environment and Natural Resources Secretary Ramon Paje, however, said the Aquino administration supports the Tampakan project as it views the mining industry as a significant catalyst for economic growth.
“Local government units cannot issue orders that goes against national policy,” Paje said.
Since 2003, mining investments in the country hit $2.8 billion. The government targets to jack this up further to $13.5 billion by 2013.
To achieve this, the DENR plans to promote downstream mining industries, bid out non-moving mining contracts and proposals and protect investments from land use conflicts.
On the other hand, in its bid to have the Tampakan mine operating, Paje said the DENR has discussed with SMC how to fasttrack the project.
Indophil and Xstrata initially eyed to complete the necessary government permits for the project by 2011 and start of construction by 2013. The mine was scheduled to be operational by 2016 before it ran afoul with the South Cotabato local government.
Once completed, SMI is expected to have infused a total of $5.9 billion in investment in the project, according to Jasareno. – With Marianne Go