UPDATE: Philippines Approves Xstrata $5.9 Billion Mine Environmental Permit

--Xstrata's Sagittarius Mines unit gets conditional approval for Tampakan mine

--Sagittarius: Will review conditions set by environmental department

--Industry group welcomes approval; says mining investment needed to create jobs

(Adds comment from industry group, background on mine and mining investment)

 
   By Cris Larano 
 

MANILA--The Philippines environmental regulator has given a unit of Xstrata PLC (XTA.LN) conditional approval to develop what will be Philippines' largest gold and copper mine.

Environmental approval at the $5.9 billion Tampakan mine, which the company has said will produce around 375,000 tons of copper and 360,000 ounces of gold a year over a 17-year period, has been complicated by a ban on open-pit mines in South Cotabato province. The mine, which covers nearly 100 square kilometers, also straddles Sarangani, Sultan Kudarat and Davao del Sur provinces on the southern island of Mindanao.

Xstrata Copper subsidiary Sagittarius Mines Inc. will still need approval from the local government and other state agencies, Environment and Natural Resources Secretary Ramon Paje said in a statement.

Sagittarius Mines said Tuesday in a statement that it has received the permit and is "reviewing the terms and conditions contained in the document."

Construction at the mine "could potentially commence in 2015, enabling commercial production in 2019," Sagittarius Mines President Peter Forrestal said in December.

Sagittarius Mines took control as operator of Tampakan in 2007. The project is a joint venture among the Tampakan Group, Xstrata and Australia-listed Indophil Resources NL (IRN.AU). The Tampakan Group--composed of local businesses--owns 60% of Sagittarius Mines, with the balance shared by Xstrata and Indophil, which in turn is partly owned by Philippine conglomerate San Miguel Corp. (SMC.PH).

The Chamber of Mines of the Philippines, a mining industry group, welcomed the environmental permit's issuance.

"It's an encouraging sign from the government, which has…[said] that the Philippines needs at least $3 billion in investments to create jobs," the chamber said.

The government cut its investment target for mining last year to $509 million from $2.27 billion due to delays in some projects. The investment target this year was also reduced, to $718.5 million from $2 billion previously. The mining industry had pointed to uncertainty in the government's mining policy, permitting challenges and a moratorium on the grant of new mining licenses as reasons for project delays.

Although the Philippines is the world's third-largest nickel producer and contributes to the global trade in other metals, the value of mining exports has slipped from more than 20% of the country's total exports four decades ago to less than 6% in 2011.

Write to Cris Larano at [e-mail]

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