SMI pushes back start of comm’l operations

MANILA, Philippines - Sagittarius Mines, Inc (SMI) is pushing back the target date for the start of commercial operations of its $5.9 billion Tampakan copper-gold project in South Cotabato to 2019 as it deals with regulatory and operational difficulties.

In a statement issued yesterday, the company said it has provided the Mining Industry Coordinating Council (MICC) with an updated project development plan for the Tampakan copper-gold project “that oulines the potential for commercial production to commence in 2019.”

SMI had originally intended to begin the commercial operations of the mine in 2016.

SMI president Peter Forrestal said that aside from the lack of response from Malacanang on the company’s appeal for the provision of an Environmental Compliance Certificate (ECC), the company is also having security problems in the project area.

Forrestal said the company needs to reconsider its power supply options for the project.

“The project has experienced a number of challenges since we submitted our Mine project Feasibility Study. These have inlcuded restrictions on field activities resulting from security issues in the project area; the need to reconsider our prefered power supply options for the project; the ongoing uncertainty created by a provincial ordinance that is in conflict with national law, and the denial of the Mine Envrionmental Compliance Certificate by the Philippine Department of Environment and Natural Resources (DENR) which is currently under appeal to the Office of the President.

SMI has a pending appeal before Malacañang for the provision of an ECC. DENR has repeatedly denied SMI an ECC because of a standing ordinance in South Cotabato banning the use of open-pit mining method.

With the issuance of a new mining policy that explicitly states that national mining laws shall take precedenece over local laws, SMI sought the intervention of Malacañang, as well as the help of the Department of Interior and Local Government, to iron out issues with the South Cotabato government.

SMI still does not want to challenge the ordinance of the South Cotabato provincial council in court although it is an option for the company.

Malacañang has not yet given a response to the petition filed by SMI. President Aquino earlier said that it may be better to wait for the passage of a law for the rationalization of mining revenues between companies and the state before the Palace responds to SMI’s petition.

The MICC, through DENR Secretray Ramon Paje, however, has promised that the harmonization of local and mining ordinances would be prioritized. 

Regarding its power supply, SMI and Alsons Energy Development Corp. have agreed to conduct a feasibility study for the construction of an $806 million coal-fired plant to supply the mine’s power needs.

Forrestal said the company would continue to engage with the communities to obtain social license for the project.

“SMI has been working for more than 10 years with the affected communities, and remains committed to obtaining a social licence to develop the project,” he said.

“We are now focussed on formalizing the consent of the affected indigenous people, consulting with the community on resettlement plans and, following elections in May 2013, seeking formal local government endorsement for the project.”

“The scope of our community and consultation activities is unprecedented in the Philippines and reflects leading standards, consistent with the commitments of our managing shareholder, Xstrata Copper, and its partners in this joint venture,” he added.

Forrestal said that if everything falls into place, construction of the mine would begin in 2015.