Xstrata's Philippine affiliate appeals Tampakan decision

MANILA Wed Feb 15, 2012 3:24am EST

MANILA Feb 15 (Reuters) - The operator of the $5.9 billion Tampakan project in the southern Philippines said on Wednesday it had appealed a government decision not to grant environmental clearance for now on what could be Southeast Asia's biggest undeveloped copper-gold reserves.

Sagittarius Mines Inc, an affiliate of Xstrata Copper which is a unit of global miner Xstrata Plc, also said it remained hopeful the government would issue an Environmental Compliance Certificate (ECC) this year to bring Tampakan into production as scheduled by 2016.

Without the ECC, Sagittarius cannot begin construction at the mine, from which an estimated 15 million tonnes of copper and 17.9 million ounces of gold can be extracted over a period of 17 years.

Sagittarius, which is partly owned by Australian miner Indophil Resources NL, made a formal appeal to the Department of Environment and Natural Resources on Jan. 27, general manager Mark Williams told reporters.

Sagittarius is still looking to complete mine construction within a period of three and a half years, he said, adding that foreign investors looking at prospects in the local mining sector were keeping an eye on the project.

"The Tampakan copper-gold project is on the international investors' radar screen and it's a barometer, a bellwether, that will send the signal to other international investors," Williams said on the sidelines of a public forum on the project's economic impact.

Environment and Natural Resources Secretary Ramon Paje in December denied Sagittarius' application for an ECC, saying it was inappropriate to issue the permit while a local ban on open-pit mining is being enforced by the host province of South Cotabato.

The South Cotabato government issued an ordinance in 2010 prohibiting open-pit mining because of its harmful effects on the environment. Sagittarius has sought to get the ban lifted, saying the local code was inconsistent with the national mining law that allows open-pit mining.

Sagittarius officials declined comment about the impact of the proposed merger of Xstrata and commodities giant Glencore on the Tampakan project.

Mining could boost economic growth in the poor Southeast Asian country, with its mineral deposits estimated at $1 trillion. But a strong anti-mining lobby led by the Catholic Church has dimmed the industry's chances.

The government's plan to raise revenue by imposing new taxes on mining companies and reviewing their contracts adds to a long list of concerns for investors.

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