MAC: Mines and Communities

Philippine province bans open-pit mining

Published by MAC on 2010-06-19
Source: Mindanews, Business World, Reuters & others

The Provincial Board of the Philippine province of South Cotabato - where large-scale mining was formerly given high priority - has proposed legislation to ban it, thus joining provinces in Marinduque, Mindoro and Palawan.

The government's mining bureau is arguing that national law supersedes provincial law, although this is an issue that the courts may well decide.

The ban will have the most profound implications for Xstrata-Zijin's Tampakan mine, recently the target of vigorous protests on Earth Day. See:

SouthCot provincial board bans open-pit mining


4 June 2010

KORONADAL CITY - The Sangguniang Panlalawigan [Provincial Board] of South Cotabato has voted to ban open-pit mining in the province, a move that merited praises from the staunchly anti-mining Catholic church.

"[It's] Divine intervention!" declared Fr. Romeo Q. Catedral, social action director of the Diocese of Marbel who is leading the church's opposition to large-scale mining. "This is a triumph for the people not only of South Cotabato but also nearby provinces," he added.

Catedral and anti-mining groups have been closely following deliberations of the environment code the past two weeks as they urged the politicians leave a legacy that would protect the people and environment from the harms of open-pit mining.

Tampakan town in South Cotabato is at the center of a proposed large-scale mining operation, mainly for copper and gold, by the foreign-backed Sagittarius Mines, Inc. The copper deposits in the area are said to be the largest undeveloped resource in Southeast Asia.

On Wednesday, the SP, after a marathon session to deliberate on the province's environment code, voted 5-4 banning open pit mining. There was one abstention while two other board members were absent.

The debate focused on the sentence "mining in any form shall not be allowed in the province of South Cotabato." The board members eventually settled on "open pit mining method and all other forms of mining shall not be allowed in the province of South Cotabato."

But in a special session on Thursday, the provincial board voted anew, 6 to 5, to ban only the open-pit mining method, according to Fr. Catedral, who still considers the development a victory. Open-pit mining has been considered by environment groups as the most destructive method.

Catedral said they will continue watching closely the deliberations - which has been going on for the last few years - until the environment code becomes an ordinance before June 30 as promised by the provincial legislators.

Sagittarius, however, seems unfazed over the development.

"The Philippine Mining Act [Republic Act 7942] allows open pit mining. A local law cannot supersede a national law," said John B. Arnaldo, Sagittarius corporate communications manager.

The provincial environment code, thus, "won't have a bearing in as far as the plans of the company to pursue the Tampakan project" is concerned, he said.

But Arnaldo said the company will continue the dialogues with the stakeholders.



Tampakan owners step up pressure vs open-pit ban

Business World

16 June 2010

SHAREHOLDERS in the $5.2-billion Tampakan copper and gold project in Mindanao are building up pressure on the governor of South Cotabato to overturn a provincial ban on open-pit mining, which could derail the country's largest single investment.

The house of South Cotabato Governor Daisy P. Avance-Fuentes, whose term ends on June 30, was picketed by supporters of Tampakan operator Sagittarius Mines, Inc. hours before a meeting with executives of Switzerland's Xstrata Copper, the main shareholder.

Ms. Fuentes said she would veto the open-pit ban in the province's new environment code if Sagittarius Mines presents proof the Tampakan project won't be disastrous to the environment and the livelihood of thousands of farmers.

The Mines and Geosciences Bureau (MGB) yesterday backed the Tampakan project, reiterating its position against any ban on open-pit mining.

"We strongly believe that the local law cannot supersede the national law or the Philippine Mining Act of 1995," Edwin G. Domingo, MGB director, told BusinessWorld in a telephone interview.

Mr. Domingo said the mining method is dictated by the position of mineral deposits in an area. The Philippine Mining Act of 1995 does not ban open-pit or any other mining method.

Indophil Resources NL, which holds a 37.5% stake in the Tampakan copper-gold project in Mindanao, said yesterday trading of its shares in the Australian bourse would remain suspended until the air is cleared over the impending local government ban on open-pit mining.

The Australian miner, the subject of a takeover bid by China's Zijin Mining Group, had announced a trading halt from June 11 to 16 following the passage of a provincial ordinance in South Cotabato banning the mining practice. The trading halt has been extended to June 23. Indophil Resources said it wants a clarification from officials of South Cotabato and mine operator Sagittarius Mines.

"Continued media reports, emanating from the Philippines, predict that the outgoing governor of South Cotabato is considering approving a local government unit proposal to introduce an Environmental Code which contains a ban on open-pit mining in the area. These same reports also confirm that any such ban is beyond the scope of authority of local legislation," Indophil Resources said in a disclosure to the Australian Securities Exchange.

Members of the South Cotabato provincial board approved last week the new environment code that would become law once signed by Ms. Fuentes, who won a congressional seat in the May 10 elections.

The Tampakan copper-gold project which is located within the municipalities of Tampakan in South Cotabato, Kiblawan in Davao del Sur, and Columbio in Sultan Kudarat, uses the open-pit mining method.

An estimated 3,000 people from communities within the Tampakan mining site picketed the residence of Ms. Fuentes yesterday in a bid to stop her from signing the provincial environment code.

Ms. Fuentes said she's giving Sagittarius Mines one week to submit technical studies, particularly one that will counter an earlier study that claims the Tampakan project will dry up a river system traversing the lowlands of South Cotabato and neighboring areas.

The study by a British group and authored by Robert Goodland and Clive Wicks was published in 2008 in a book titled Philippines: Mining or Food?.

Ms. Fuentes noted that for five years that the environment code was under deliberation, the company failed to provide technical details of its project despite repeated demands from the provincial government.

"Perhaps the British study is accurate [that's why the company is keeping their technical study from us]," Ms. Fuentes said. The British study shows a map where Sagittarius Mining operates, covering a thickly forested area traversed by rivers, she said.

Excavating mineral resources using open-pit method would effectively kill the watershed source and eventually dry up rivers in the lowlands, said Ms. Fuentes.

She said she was leaning toward signing the environment code because the risk of open-pit mining to the province was too high, pointing to the location of mineral resources vis-a-vis the water sources and chemicals to be used in the operation. She noted that 90% of Sagittarius Mines' profit "will go out of the country."

Dalina Samling, tribal chieftain of Barangay Danlag in Tampakan, South Cotabato, said they were not aware the company has not submitted the technical study requested by the provincial government for a long time.

"We will hold a rally so that [Sagittarius Mines] will submit what the provincial government wants," Ms. Samling said, appealing to Ms. Fuentes repeatedly during a dialogue to junk the environment code.

Ms. Fuentes said Sagittarius Mines had submitted reports to the provincial government but these are all on economic aspects of the Tampakan project.

John B. Arnaldo, Sagittarius Mines corporate communications manager, could not be reached for comment.

Ms. Fuentes said the official copy of the new environment code has not yet been submitted to her, although she has read a draft of it.

The outgoing governor and incoming representative of the second district of South Cotabato said that following the Sangguniang Panlalawigan's approval of the environment code last week, she met with top officials of Sagittarius Mines, including general manager Mark Williams.

Peter J. Forrestal, Sagittarius Mines president and Xstrata Copper executive general manager for Asia Pacific, was to meet the governor yesterday.

Xstrata Copper, the world's fourth-largest copper producer, has the controlling equity in the Tampakan project.

-- Kathleen A. Martin and Romer S. Sarmiento

Zijin Says Open-Pit Ban Adds ‘Uncertainties' to Indophil Mine


11 June 2010

Zijin Mining Group Co., buying Indophil Resources NL, said a ban on open-pit mining by a local government in the Philippines adds "uncertainties" to the Tampakan mining project partly owned by the Australian company.

Zijin in December agreed to buy Indophil Resources to gain a stake in Southeast Asia's largest untapped copper and gold deposit in the Philippines. The bid is awaiting Chinese regulatory approval.

"Since we are still awaiting approval for the bid, we can't say what we will do," Zhao Jugang, head of board secretary office at Zijin, said by phone. "Certainly the ban would add uncertainties to the project."

A unit of Xstrata Plc, the majority owner of the deposit, said yesterday it will consider "available options" after the provincial government banned open-pit mining. Open-pit mining is the safest and only economic method for mining the deposit, the unit said.

Zijin, China's largest gold producer, fell 0.2 percent to close at HK$5.62 in Hong Kong trading.

-- Helen Yuan. Editors: Tan Hwee Ann, Tony Barrett

Indophil Suspends Shares After Mining Ban Reports

By Jason Scott


15 June 2010

Indophil Resources NL, owner of a third of the undeveloped $5.2 billion Tampakan copper project in the Philippines, suspended its shares from Sydney trading following reports of a provincial ban on open-pit mining.

The company is seeking clarification from government officials and partner Sagittarius Mines Inc., a unit of Xstrata Plc, Melbourne-based Indophil said today in a statement. Media reports say that the outgoing provincial governor of South Cotabato is considering approval of a ban, it said.

"These same reports also confirm that any such ban is beyond the scope of authority of local legislation," Indophil said.

Xstrata and Zijin Mining Group Co., which agreed in December to buy Indophil for A$545 million ($471 million), have said they are concerned by the mooted ban. The Tampakan project is Southeast Asia's largest untapped copper and gold deposit.

Shares of Indophil were halted on June 11. They fell 0.9 percent to A$1.095 the previous day, giving the Melbourne-based company a market value of A$462 million. The stock will be suspended until no later than June 23, today's statement said.

Sagittarius, which has a 62.5 percent stake in Tampakan, said last week it will consider "available options" after the province's legislative council approved a ban.

The project will produce an average of 340,000 metric tons of copper and 350,000 ounces of gold annually for 20 years, Indophil said in April 2009, citing a study by Xstrata, the world's fourth-largest copper producer. First production may start in 2016, it said in October.

Fujian province-based Zijin is the largest gold producer in China, which is the world's biggest metals consumer.

Editors: Keith Gosman, Andrew Hobbs

Indigenous And Environmental Groups Laud Open Pit Mining Ban In South Cotabato, Philippines

15 June 2010

Various groups including indigenous communities lauded the Provincial Board of South Cotabato for banning open pit mining in the province as stipulated in the newly passed environment code of the province.

"Nalipay kami nga ginabawal na ang open pit mining sa prubinsya" said Daguil Capion, a B'laan leader of Datal Biao community in Tampakan, South Cotabato. (We are happy that open-pit mining will now be banned in the province)

Capion has been leading his fellow B'laans in opposing Swiss-owned SMI-Xstrata's Tampakan Copper Gold Project in the tri-boundary of South Cotabato, Davao Del Sur and Sultan Kudarat provinces.

Capion also criticized the company for bringing his fellow B'laans to a rally in Koronadal City to oppose the passage of the new environment code but neglected them afterwards.

"Naluoy ko sa akong mga paryente kay nagbaktas lang sila pauli ug gipang gutom, mga alas dose na sa gabii sila nakaabot sa Datal Biao. Ako na lang sila gipakaon ug gipakape." added Capion. (I pity my relatives who walk their way home and hungry, and arrived at midnight here in Datal Biao. I offered them food and coffee)

Jubilant yet vigilant

"The Environmental Code is a landmark legacy of the present Provincial Board of South Cotabato and at the same time a victory of the people in Region 12" said spokesperson Sr. Susan Bolanio, OND of SOCSKSARGEN CAN (Climate Action Now).

"The banning of open pit mining is a milestone in the 15-year people's campaign against the Tampakan copper-gold project or what was then known as the Columbio FTAA" said Jean Marie Ferraris of the Legal Rights and Natural Center (LRC-KsK/FoE Phils)

Ferraris added that the members of the Sangguniang Panlalawigan "have courageously exercised their right to say no to large-scale mining that would only jeopardize the welfare of their constituents in the province".

Bolanio however warns that the battle isn't over yet, saying that "there are powers that be who will work hard to challenge and block the open pit mining ban provision of the code".

Tribute to Fulong Binuhay Masalon

Meanwhile, B'laan communities in Malungon, Sarangani Province were deeply saddened by the death of Fulong Binuhay Masalon, the tribal chieftain of Barangay B'laan.

Masalon has led his people in fighting against the entry of SMI-Xstrata in their ancestral domains. Before he died, the tribal chieftain told his people to continue defending their land.

"We will never allow SMI-Xstrata to destroy our lives and livelihoods" said one of the leaders in the community.

Xstrata to go ahead with $5.2bn Philippines project, despite risk of ban

Manny Mogato


11 June 2010

MANILA - A unit of global miner Xstrata vowed on Friday to proceed with public discussions and technical studies on a $5.2 billion copper-gold project in the southern Philippines despite the risk of a ban on the venture.

Manila has ambitious plans to pull the mining sector from its current moribund state by luring billions of dollars of foreign investment for development, but analysts warn the ban could prove a major test case of its policies, and derail such moves.

The Tampakan mine, considered Southeast Asia's largest undeveloped copper-gold prospect, was opposed by local residents who feared the open pit mining method to be used by Xstrata's Philippine affiliate Sagittarius Mines Inc would pollute a major river irrigating farms. Mine production is set to start in 2016.

"We will continue with our engagements and with whatever studies," said John Arnaldo, spokesman of Sagittarius Mines.

"Of course, our shareholders are concerned," he told Reuters. "We will respect whatever decision the provincial board and the governor may have and we will take it a step at a time."

Xstrata could continue its pre-development work on the mine because the ban has yet to take effect, state agency the Mines and Geosciences Bureau (MGB) said.

The agency also said it may question the ban with the courts as a last resort, adding the measure could hinder investment in the mining sector.

On Wednesday, the legislative council of South Cotabato province in the southern Philippines passed a law banning open pit mining due to environmental concerns, a move that directly hits the Tampakan mine project of Xstrata -- the world's fourth largest copper producer.

Provincial governor Daisy Avance-Fuentes had told Reuters she was likely to approve the measure because of its wide local support, adding the ban could take effect before local officials step down on June 30.

Legal Route

The government would use all means to assure residents all necessary safety and environmental safeguards would be in place around the Tampakan mine, MGB director Edwin Domingo said. He added that Manila was hopeful the new local government taking over by the end of June would reconsider and amend the ban.

"There's still the legal process because we sincerely think that national laws are superior over local laws. As much as possible, we don't want to go into that angle," Domingo told Reuters on Friday.

"We would rather exert and maximise all available efforts to really discuss further with the stakeholders their various issues and concerns.

"This is going to have a negative impact on our future investors. A lot of our copper and gold deposits can be technically and viably developed only through open pit mining."

Analysts criticised the local government's action, saying it ran counter to the Philippines' policies and national interests.

"It's very bad," Peter Wallace, head of investment consulting firm Wallace Business Forum, told Reuters. "To impose a restriction, it's short-sighted."

"You can write mining off because Xstrata has gone a long way and is now well known in the mining community," he said. "People are watching that. What is happening here is an indicator of the acceptability of other companies coming in as well. So it's a major test case."

Xstrata has completed a feasibility study of Tampakan, which has an estimated resource of 2.2 billion tonnes containing 12.8 million tonnes of copper and 15.2 million ounces of gold at a 0.3 percent copper cut-off grade.

Other analysts say the Philippine measure could prompt other countries to take similarly stringent action to protect the environment.

Australia's Indophil Resources NL has a 34 percent stake in the Tampakan venture. The mine, discovered in 1991, never left the drawing board because it was dogged by environmental woes, communist insurgencies, and political instability.

(Writing by Rosemarie Francisco; Editing by Clarence Fernandez)

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