Xstrata under attack in the Philippines
Published by MAC on 2008-01-04
Xstrata under attack in the Philippines
4th January 2008
An attack last week on theTampakan copper project in the Philippines was the responsiblity of the Communist Party of the Philippines' New Peoples' Army (NPA). THE NPA said it was punishing local company, Sagittarius Mines,for its "plunderous" activities. But the key target - and no doubt accounting for the timing - was Xstrata, the huge UK-Swiss mining conglomerate which announced in December that Tampakan would be its most important venture over the coming year.
Communist rebels attack mining firm's South Cotabato base
Business World, Vol. XXI, No. 108
2nd January 2008
Police looking into revolutionary tax extortion angle
KORONADAL CITY — Suspected New People’s Army (NPA) rebels stormed on New Year’s Day the base camp of foreign-backed Sagittarius Mines, Inc. in hinterland Tampakan, South Cotabato and burned several facilities, police said.
Senior Superintendent Robert R. Kiunisala, South Cotabato police director, said 30 to 40 communist rebels simultaneously attacked the Sagittarius’ base camp and a military detachment in Barangay Tablu at around 3 a.m.
"There were exchanges of gun fire but no one was reported injured. The communist rebels burned the administration building [of Sagittarius] and [the facility of] United Philippines Drilling. The quarters of security guards and other buildings were also destroyed," Mr. Kiunisala told BusinessWorld.
United Philippines is a contractor for Sagittarius’ drilling activities.
It was the first violent attack on the company since it started operations in 2003. The project was originally undertaken by Western Mining Corp. in the 1990s.
Sagittarius is controlled by major global mining firm Xstrata Copper based in Brisbane , Australia with the backing of Indophil Resources NL, an Australian publicly listed company, incorporated in 1996, to acquire, explore for, and develop gold and copper-gold opportunities in Asia-Pacific.
Rodolfo Coloso, Jr., Sagittarius base camp supervisor, told BusinessWorld the company immediately held an emergency meeting after the incident.
In a statement, Rolando Doria, Sagittarius local and regional affairs superintendent, said policemen from the provincial command went to the base camp to investigate and to temporarily secure the premises.
But the statement, issued at around 4:30 p.m. yesterday, did not mention anything on the NPA’s role in the incident.
Mr. Doria said the company is still assessing the cost of damage brought by the attack and that Sagittarius will issue a follow-up statement as details become available.
The company confirmed no one was injured in the incident.
Mr. Kiunisala claimed the attackers wanted to extort revolutionary tax from the company, whose operations is strongly opposed by the local Catholic Church.
Fr. Romeo Catedral, social action center director of the Diocese of Marbel, said in text message that "more or less 100 armed men attacked the base camp between 2 a.m. to 3 a.m."
Mr. Kiunisala said the rebels briefly held Sagittarius’ chief security officer, Joselito Deles, adding two workers have also been accounted for.
He noted the firm has been receiving threats from the NPA Front 76 field unit allegedly headed by Emmanuel Fernandez alias "Kumander Bobo" and Noel Legaspi alias "Kumander Jeoffrey." He said Army troops have launched pursuit operations against the attackers.
Last month, Xstrata Copper, Sagittarius’ top investor, announced it will exploit massive copper and gold resources in the mines development site, which straddles the towns of Tampakan, Columbio in Sultan Kudarat and Kiblawan in Davao del Sur, using the open-pit mining method.
Sagittarius, which is still conducting exploration activities, is expected to start full-scale operations in late 2012.
Also last month, Xstrata Copper released a new estimate, its first since assuming management responsibility in March, that pegged mineral resources at 2.2 billion tons, up 10% from the last estimate declared in April 2006.
The upgraded measured, indicated and inferred resource totals 2.2 billion tons at a grade of 0.6% copper and 0.2 grams per ton gold and contains 12.8 million tons of copper and 15.2 million ounces of gold using a 0.3% copper cut-off grade, the company said in a statement.
The new mineral resource, which includes 24,700 meters of drilling conducted in 2007, also includes estimated average grades for molybdenum of 70 parts per million.
Previous estimates pegged resources at two billion tons, containing 11.6 million tons of copper and 14.6 million ounces of gold at a 0.3% copper cut-off grade. — Romer S. Sarmiento
Mining firm punished for landgrabbing, plunder--CPP
Communist Party of the Philippines Information Bureau Release
2nd January 2008
The Communist Party of the Philippines (CPP) today said the raid conducted yesterday by the New People's Army (NPA) against Sagittarius Mines Inc. (SMI) in Tampakan town, South Cotabato had the singular objective of punishing the giant Swiss mining firm for land grabbing, plunder and environmental destruction in response to a longstanding demand of the people to put a stop to the firm’s operations in the area.
CPP spokesperson Gregorio “Ka Roger” Rosal explained that the punitive raid against the mining firm was timed precisely on the holiday when its mining operations were at a standstill and its workers and employees were out on a holiday break to ensure none of them would be hurt in the raid. No civilian was hurt in the raid.
The NPA guerrillas seized a pistol, a shotgun, a two-way radio set from the guards during the raid. They also fired deterrent shots at a nearby detachment of the Philippine Army in order to prevent the government forces from coming to the defense of the mining firm they are serving and in order to allow the unhampered withdrawal of the NPA forces.
“Since a ceasefire was in effect, the NPA unit did not pursue a tactical offensive against the Army troops in Tampacan. But those fascist troops have crimes against the people to pay for, and the NPA will punish them in due time when a ceasefire is not in effect.”
The CPP spokesperson said that “Yesterday's raid against SMI is an important milestone in the effort to put a stop to the firm’s destructive and plunderous mining operations, defend the ancestral domain of the B'laan tribe; protect the environmental balance of the Liguasan Marsh and the water supply of South Cotabato, North Cotabato, Sultan Kudarat and General Santos City areas; and resist the Arroyo regime's campaign to auction off the country's natural resources to big foreign capitalists.”
Rosal said mining operations in Tampacan have been vigorously opposed by the people since the 1990s when these were being conducted by the Western Mining Corporation (WMC), which was later renamed Tampakan Mineral Resources Corporation. In 2002, SMI took over the WMC operations after these were halted in the face of strong opposition by the townspeople.
Rosal said that “The local folk are resisting the plans of SMI to start open pit mining operations by 2010 in the forested villages of Bong Mal, Tablu, Danlag and Folu Bato. Open pit mining operations are considered as among the most ecologically destructive method of mining as this wipe out entire forests and watershed areas.”
SMI's preliminary feasibility studies estimates the Tampakan mine site to be one of the world's “best new large-scale copper gold mines,” with an estimated 11.6 million tons of copper and 14.6 million ounces of gold. SMI is partly owned by Xstrata, one of the world's largest mining company based in Switzerland .
Rosal said the raid against the SMI is in accordance with the general directive of the CPP to carry out offensive operations against big foreign mining firms that the Arroyo regime brings into the country to plunder Philippine natural resources. “The Arroyo regime lets big foreign mining companies siphon out billions of dollars worth of Philippine natural resources to the further detriment of the people's livelihood and the the environment.”
“As the people intensify their struggle to assert national patrimony against the rapacity of foreign monopoly capitalists, the New People's Army will carry out more and more punitive actions in response to the people's demands to stop the unbridled rapacious and destructive operations of big foreign mining companies.” Reference:
Marco Valbuena
Media Officer
Cellphone Numbers: 09179776392 :: 09282242061
E-mail:cppmedia@ gmail.com
Troops deployed to secure Tampakan minesite
MindaNews
2nd January 2008
KORONADAL CITY -- To prevent another attack on the facilities of Sagittarius Mines, Inc. (SMI), elements of the Philippine Army will be fielded to the company’s base camp in Tampakan, South Cotabato. First Lieutenant Nathaniel Morales, 27th Infantry Battalion civil affairs division in-charge, said the military will field soldiers whether the company will request it or not. “It is our constitutional duty to protect lives and properties,” he added.
Suspected members of the New People’s Army (NPA) staged an attack on the mining firm on New Year’s Day, burning two buildings, according to the police.
Senior Supt. Robert Kiunisala, South Cotabato police director, said at least 40 heavily-armed NPA rebels forcibly entered the SMI base camp in Barangay Tablu, Tampakan around 3 a.m. on New Year’s Day.
The base camp is located about 25 kilometres from the headquarters in downtown Tampakan, a three-hour uphill ride.
Kiunisala said the rebels immediately disarmed and held the company's security personnel led by its chief security officer Joselito Velez.
No one was hurt in the attack but he said the rebels burned the base camp's administration building, quarters and offices of the United Pacific Drilling Corp. (UPD), a drilling firm contracted by SMI.
"It was very swift. It appears to (have been) a well-planned attack," he said.
Kiunisala said the attackers, who are reportedly members of the NPA's Front 76 operating in the provinces of South Cotabato and Sultan Kudarat and portions of North Cotabato and Davao del Sur, were led by Emmanuel Fernandez alias Commander Bobo, alleged Front 76 secretary, and another alias Jeffrey.
Fernandez’ group has yet to issue a statement but GMANews.tv quoted Gregorio “Ka Roger” Rosal, Luzon-based spokesperson of the Communist Party of the Philippines (CPP), as saying the NPA was behind the attack against SMI allegedly to punish the firm for “alleged land grabbing, plunder, and environmental destruction.”
“He said the rebels scheduled the attack during the holidays, when the firm's mining operations were at a standstill, and its workers were on a break,” GMANews.tv reported.
SMI is currently exploring the mountains of the boundaries of Tampakan, Columbio in Sultan Kudarat and Kiblawan in Davao del Sur, for a proposed large-scale copper and gold mining project in the area.
The company, which is now on extended pre-feasibility study stage, is backed by foreign mining firms Xstrata Copper and the Australian firm Indophil Resources NL.
SMI expects to exploit massive copper and gold resources by 2012.
Top investor Xstrata Copper issued a new estimate, its first since assuming management control in March 2007, pegging the resources at 2.2 billion tons, up 10 percent from the last estimate declared in April 2006.
The mining site’s upgraded measured, indicated and inferred resource totals 2.2 billion tons at a grade of 0.6% copper and 0.2 grams per ton gold and contains 12.8 million tons of copper and 15.2 million ounces of gold using a 0.3% copper cut-off grade, according to SMI.
The new mineral resource, which includes 24,700 meters of drilling conducted in 2007, also includes estimated average grades for molybdenum of 70 parts per million.
The April 2006 estimate pegged resources at two billion tons, containing 11.6 million tons of copper and 14.6 million ounces of gold at a 0.3% copper cut-off grade.
Rolando Doria, SMI local and regional affairs superintendent, said the firm has yet to make a stand on the matter of military deployment in their mine site.
“We understand, though, that they have a constitutional duty to perform,” he said, but pointed out that the deployment of more soldiers in the area may need community consultation.
He said the detachment attacked by the rebels, which is about 30 to 50 meters from the base camp, mainly serves as the military’s communication point.
Doria told MindaNews the base camp was secured by “blue guards” or company guards. He said they have left it to the police to investigate. The police had not sent a report as of 4 p.m. January 2.
But Doria acknowledged there may have been lapses in security because of the New Year.
The CPP through Rosal announced on December 23 that they would observe a four-day ceasefire from December 24 to 25 and December 31 to January 1 “as a matter of party policy and in deference to the Filipino holiday tradition.”
The government declared a "suspension of offensive military operations" against the NPA from December 16 to midnight of January 6.
1Lt Morales, who described Sagittarius as an “economic asset” of the government even if it is owned by foreign corporations, appealed to communities near the operations of the mining firm to help the military in securing the company by reporting sightings or providing information on armed men in the area. (MindaNews)
Sagittarius not shifting plan on project despite NPA attack
Business World, Vol. XXI, No. 110
4th January 2008
GENERAL SANTOS CITY — Sagittarius Mines, Inc. is not changing its plans on a massive copper and gold project in Tampakan, South Cotabato despite an attack on its base camp by the New People’s Army (NPA) on New Year’s Day.
A Sagittarius official hinted of such when sought yesterday for comment on the admission of NPA spokesman Gregorio "Ka Roger" Rosal that they had carried out the assault; and left it to community leaders and residents to react to the atrocity.
The company did not issue a press statement as of noon yesterday in reaction to Rosal’s statement issued Wednesday afternoon.
"I think it’s better that the community leaders and residents respond [to the allegations of the communist rebels]," Rolando Doria, Sagittarius’ local and regional government affairs superintendent, said in a text message.
Mr. Doria did not answer his cellphone to respond to the allegations of Rosal.
Before dawn on New Year’s Day, about 30 to 40 NPA rebels stormed the base camp of Sagittarius in far-flung Barangay Tablu, Tampakan, South Cotabato and burned several facilities. The attackers also harassed a nearby military detachment. No one, however, was injured in the incident.
Mr. Rosal said in a press statement that the raid conducted by the communist rebels had the singular objective of punishing the mining firm for "land grabbing, plunder and environmental destruction in response to a long-standing demand of the people to put a stop to the firm’s operations in the area."
He said that mining operations in Tampakan have been "vigorously opposed" by the people since the 1990s when these were being conducted by the Western Mining Corp., which was later renamed Tampakan Mineral Resources Corp. In 2003, exploration activities were resumed under Sagittarius.
Mr. Rosal vowed more attacks against large mining firms in the country.
On Wednesday, Mr. Doria said the timetable of the company is still on track despite the incident, the first violent attack on the firm in four years.
He added the company expects to start full-scale operation by 2012, noting that present activities are still focused on drilling and exploration to complete an extended pre-feasibility study.
A pre-feasibility study was completed more than a year ago to the tune of A$27 million (P978.21 million at P36.23:A$1), financed by Australian firm Indophil Resources NL.
Giant global mining player Xstrata Copper Plc, based in Brisbane , Australia , entered the picture last March after exercising an option agreement with Indophil, with the former controlling 62.5% of Sagittarius’ stakes.
Mr. Doria also said the other day that the communities within the mines development site were "dismayed" by the incident.
"The communities expressed their [continuous] support to the venture following the attack," he claimed, stressing the "company is very thankful for that gesture."
Mr. Doria reiterated that host communities, Mindanao and "even the whole Philippines " will reap economic benefits from the Tampakan project, which will be excavated using open-pit method based on a preliminary study. — Romer S. Sarmiento
Rebels Agitate Xstrata Investors
Parmy Olson, Forbes.com
2nd January 2008
LONDON - The booming mining industry is used to hearing bad news about strikes and attacks at the mines that churn out its increasingly valuable commodities. But investors in Xstrata were still concerned Wednesday about the future of one of the company's largest mines after rebels in the southern Philippines attacked it on New Year's Day and vowed to carry out further assaults.
Shares in Xstrata closed 2.4%, or 85 pence ($1.68 cents), lower, at £34.65 ($68.68), on Wednesday in London, on news that a $2 billion gold-and-copper mine, due to begin production in 2011, had been targeted by Communist rebels in the early hours of Tuesday. The rebels from the Communist New People's Army set fire to six buildings at the Tampakan mine and fired on an army detachment with machine guns before retreating. There were no casualties.
The rebels later said they had attacked the mine to "punish" the Zug, Switzerland-based firm and said they would carry out "more and more punitive actions."
Hanré Rossouw, a London-based spokesman for Xstrata, would not comment on the attacks and said the company was "still assessing the situation." One analyst who did not wish to be named said that that mine disruption was, "not that uncommon, but it can have a potential to delay things." Xstrata is currently in the middle of a feasibility study for Tampakan and officials at the mine were quoted by Reuters as saying that the attack would not affect this research.
But investors are still worried that the attack will delay the launch of Tampakan, one of the biggest underdeveloped copper resources in Southeast Asia.
The mine holds 12.8 million metric tons of contained copper and 15.2 million ounces of contained gold. At Wednesday's market prices, that's worth $85.8 billion and $12.9 billion respectively, before the cost of getting those resources out of the ground. Xstrata has said that the first copper would be produced from the mine in late 2011.
Fortunately for Xstrata, the Communist guerillas of the Philippines are at their weakest in 12 years in military terms, according to an Armed Forces report obtained by Agence France-Presse last week. But they have been waging a rebellion in the Philippines for decades.
"As the people intensify their struggle to assert national patrimony against the rapacity of foreign monopoly capitalists, the New People's Army will carry out more and more punitive actions in response to the people's demands to stop the unbridled rapacious and destructive operations of big foreign mining companies," a statement from the Communist Party of the Philippines said on Wednesday. Xstrata bought 62.5% of Tampakan from Sagittarius Mines in December 2006, and began managing the mine on March 30, 2007. Australia's Indophil owns 34.1% of the Tampakan mine.
In December, Xstrata confirmed it was in merger talks with "a number of parties" in the mining industry. (See: "Xstrata's Talking Takeovers") Many analysts believe Xstrata would make a good fit with British rival Anglo American.
Indophil Resources
Tim Boreham, The Australian
4th January 2008
INDOPHIL and Xstrata, owners of the Tampakan copper and gold deposit in The Philippines, assert this week's attack on its base camp by communist insurgents was aimed not at them, but at the nearby military.
But in claiming responsibility, the New Peoples Army declared a fatwah on the operation. The NPA said the raid had the "singular objective of punishing the giant Swiss mining firm (62.4per cent owner Xstrata) for land grabbing, plunder and environmental destruction".
Furthermore, it "will carry out more and more punitive actions in response to the people's demands to stop the unbridled rapacious and destructive operations of big foreign mining companies".
Thoughtfully, the NPA timed the raid on a holiday, when workers were elsewhere. During the incident, two buildings were torched and weapons fired, some in the direction of a nearby Philippines Army detachment. No one was injured.
Hyperbole aside, it's all rather unsettling given the NPA is not made up of harmless duffers in Che Guevara T-shirts, but a heavily armed irritant to successive governments.
The locals have opposed Tampakan, touted as South-East Asia 's biggest undeveloped copper deposit, since the old WMC unearthed it in 1992. WMC sniffed the winds of discontent and offloaded it to Indophil, with Xstrata farming in last year.
True to his theme of the undue risk of many offshore resources projects, Criterion is wary and rates Indophil, which has no other major asset, an avoid.
Philippines President Gloria Arroyo has pledged to drive the Reds back under their beds by 2010, but we've heard similar rhetoric before. Indophil is a $360million market cap bet on the project, aimed at producing 200,000 tonnes of copper and 200,000 ounces of gold by 2012, going ahead.
The Philippines has not been a happy hunting ground for our miners. Lafayette Mining called in the receivers last month, its polymetallic mine on the island of Rapu Rapu having been closed after a cyanide spill.
In July 2006, OceanaGold acquired Climax Mining and its Didipio gold and copper mine in a $230 million scrip deal. Since then, Oceana has been hounded by Oxfam-backed allegations of environmental abuse and mistreatment of local villagers (denied by the company). Although Didipio is a key plank of Oceana's growth strategy, current production derives from its expanding Macreas project on New Zealand 's South Island , where the closest thing to an insurgent is a hungry flock of Horned Dorsets.
Oceana is on track to boost its production to 280,000 to 300,000 ounces this year, through the underground expansion of Macreas and its recently commissioned Reefton mine. Didipio, due for commissioning in 2009, is expected to spit out 320,000 to 340,000 ounces in that year.
Oceana's 2007 performance was blighted by lower production and higher cash costs, compounded by a $47 million loss on the hedge book, which has since been restructured.
Management promises a better showing this year. With the stock having declined from its June 26 record of $4.15, we think Oceana has been adequately punished for its Philippines foray and rate the stock a speculative buy.
Coming back to Indophil, the moral of the story is that although it's nice to have a monster copper mine, location (in Tampakan's case Filipino bandit country) does matter.
Bougainville's Panguna mine was also a rich copper deposit and it's been dormant since 1989 when it was shut down by rebels. We rest our case.