SMI reiterates commitment to pursue Tampakan project

MANILA, Philippines - The operator of the proposed $5.9 billion Tampakan copper-gold project in South Cotabato yesterday said commodities giant Glencore Xstrata is still committed to developing the the project, having approved the workplan in the tenement for the year.

Last month, the project’s minority stockholder Indophil Resources NL reported that Glencore has expressed interest in divesting its stake in the project, consistent with its preference not to develop greenfield projects. Glencore Xstrata, the project’s majority investor, holds a 62.5 percent interest in the project while Indophil holds a 37.5 percent stake.

Indophil is currently 30 percent owned by Filipino corporations. These include the Alsons group through funding by BDO Unibank, the SM group, San Miguel Corporation and Philex Mining Corp.

Indophil has said it is committed to preserving the value of the investment either by development of Tampakan, or 100 percent ownership of operator Sagittarius Mines, Inc. (SMI).

SMI spokesman Manolo Labor said Glencore approved in December 2013 the work plan for this year, indicating that the global commodities giant still supports the project.

“Glencore’s approval of SMI’s 2014 work program and budget illustrates that Glencore continues to fully support the Tampakan project,” said Labor.

He said that with the impending sale of Glencore’s Las Bambas copper project in Peru, there would be less pressure on the commodities trader to let go of the Tampakan project.

SMI is now waiting for the advise of the interagency working group (IAWG) created within the Mining Industry Coordinating Council (MICC) to come up with solutions to problems confronted by the proponents, after which, they can prepare for the filing of documents for the Declaration of Mining Project Feasibility (DMPF).

The IAWG is expected to meet this month to deliberate on solutions to the challenges faced by the operator.

“The creation of the IAWG was an encouragement for Glencore,” said Labor. “What they really want is a clear pathway for the approvals process.”

The DMPF is a document containing an assessment of the commercial viability of deposits. Securing the DMPF is the final step to the commencement of operations.

Labor said that the company had signed in September 2013 the ECC issued by the government in February 2013.

It took some time before the company could sign the ECC as it deliberates on the condition of perpetual liability for any environmental damage that occurs within its tenement.

After securing the ECC, SMI is still challenged by conflicting agrarian-reform claims within its tenement, the open-pit mining ban in South Cotabato, and the difficulty in securing the Free Prior Informed Consent (FPIC) of communities that would be impacted by its operations. 

For this year, SMI would continue to operate under a reduced work plan as it struggles with the permitting process. While a clear pathway for resolving key issues in beginning the project is being created, expenditure in the tenement has been reduced to $1 million a month from $4 million a month under the previous work plan.

Labor said that this year, the company would focus on moving the approval process, maintaining the tenement, and addressing the conflicting agrarian reform claims within the property.