Australian exploration company Indophil Resources NL said low metal prices and market uncertainty have taken their toll on the planned commercial operation of the Tampakan Gold and Copper project.
In a report to the Australian Stock Exchange, Indophil Brian Philips said prevailing world market conditions were further aggravated by the decision of its majority partner at Sagittarius Mines Inc. to significantly reduce the operations of the controversial South Cotabato-based mining company.
The Swiss-based Glencore-Xstrata controls 62.5 per cent of SMI which owns the Tampakan project.
Indophil owns the remaining 37.5 stake at SMI.
Glencore International took over control of Xstrata Plc following their merger in 2013 to form the world’s fourth largest diversified mining company.
Following the takeover, Glencore-Xstrata decided “to proceed with a heavily-reduced work plan, significantly reducing expenditure on Tampakan,” according to the report of Philips.
Glencore-Xstrata’s ownership over SMI likewise “became subject to conditions set by the Chinese government’s Ministry of Commerce (MOFCOM) as part of the merger approvals.”
Among the conditions set by the Chinese government is the sale of either the already operating Las Bambas copper project in Peru or the Tampakan mine.
The sale of Las Bambas has not been completed as of this writing.
“These conditions have complex ramifications that are affecting all of our interests, and they introduced significant uncertainty for the Project and its owners/managers,” Philips disclosed further.
Looking to divest
In October last year, Indophil Chief Executive Officer Richard Lauffman said Glencore-Xstrata advised Indophil of the former’s preference to divest from SMI.
Indophil however said Glencore-Xstrata has not formalized the process.
“No agreement on how to move forward has been reached with Glencore-Xstrata,” Indophil said.
The exploration company however said it is willing to proceed with the Tampakan project alone or in partnership with interested investors.
An Indophil source who requested that his name be withheld last year said they are preferred Filipino partners in the event Glencore-Xstrata’s stakes are up for sale.
As the minority partner, Indophil holds the right of first refusal in case Glencore-Xstrata decides to diversify.
At present, 30 percent of Indophil’s stake in SMI is already owned by Filipino corporations led by Alcantara and Sons, PLDT, San Miguel Corporation and SM Prime Holdings.
In addition, SMI also faces strong resistance from the local Church in South Cotabato and is stymied by a provincial ordinance banning open pit mine in the province.
Although, it has already secured an environment compliance certificate (ECC), SMI was still required to secure the approval of host local government units and host communities.
Last year, however, a respected tribal leader was slain by suspected government militiamen in Columbio, Sultan Kudarat.
Blaan elder Anting Freay, who was slain outside his house, was an uncle of fugitive Daguil Capion.
Anting’s son Victor was also killed in the same incident several meters away from his house.
Capion is a tribal leader who is leading a group of Blaan tribesman who took up arms against SMI.
Capion has admitted joining forces with the communist-led New People’s Army, who also vowed to resist the mining operation of SMI.
The Tampakan project is touted as having the world’s largest untapped copper and gold deposits with a potential annual average production of 375,000 tons of copper in concentrate for at least 17 years.