Philex enters $25-M insurance settlement for Padcal tailings spill

MANILA, Philippines - Philex Mining Corporation has entered into a $25 million settlement agreement with Chartis Philippines Insurance Inc, to defray the expenses incurred for the tailings spill incident in its Padcal copper-gold mine in Benguet last year.

“Philex Mining Corporation has entered into a settlement, release and policy buy-back agreement with Chartis Philippines Insurance Inc for the compromise settlement of the company’s insurance claims under its Pollution Legal Liability Select Policy with Chartis,” Philex president Eulalio B. Austin Jr. said in a disclosure to the local bourse late Friday.

“The claims pertain to the discharge of tailings from the tailings storage Facility 3 of the company’s Padcal mine that occurred commencing in August 2012.”

The company said that under the terms of the agreement, Chartis would pay the $25 million in full settlement with 15 days from the date of the agreement.

Company officials said that pending the collective decision on the use of the settlement funds, it would be diverted to the company’s general fund for general corporate use. 

“It (funds) will be part of the company’s general fund for general corporate purposes,” said company spokesman Mike Toledo.

Philex earlier said it would comply with the Feb. 19 deadline set by the Mines and Geosciences Bureau (MGB) for the payment of the P1.034 billion fine imposed for the 20 million tons of tailings spilled from its compromised tailings facility.

The company also faces a P92.8 million fine imposed by the Pollution Adjudication Board (PAB) for the contamination of the Agno River and Balog Creek.

Philex is petitioning the MGB to immediately allow it to temporarily resume operations to be able to produce fresh tailings to fill the void in the compromised tailings facility before the rainy season.

The process called beaching was recommended by the foreign consultants hired by Philex for the rehabilitation of the tailings pond.

Because the tailings pond was designed to hold solids, 3.5 million tons of fresh tailings should be dumped into the ponds to push away the water from the dam. This would create what is called a beach.

It would take about three to four months to produce the volume of silt needed for beaching.

The copper concentrate that would be produced from the temporary resumption of operations would be stored as part of the mine’s stockpile and would not be sold until the Department of Environment and Natural Resources (DENR) lifts the suspension order on mine operations.