Philippines rejects Philex appeal, orders it to pay $24-mln fine

MANILA Thu Nov 22, 2012 2:52am EST

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MANILA Nov 22 (Reuters) - Top Philippine gold and copper producer Philex Mining Corp will not be allowed to reopen its Padcal mine unless it pays a $24-million fine for a tailings spill in August and completes cleanup operations, the environment minister said on Thursday.

Philippine Environment and Natural Resources Secretary Ramon Paje has rejected Philex's appeal against a fine of 1 billion pesos ($24 million) imposed by the government after the spill polluted a river on the main island of Luzon used to supply irrigation and a hydropower plant.

The government formally demanded payment of the fine in a Nov. 21 letter by Mines and Geosciences Bureau (MGB) Director Leo Jasareno to Philex President Eulalio Austin, and gave the company 45 days to comply.

"We denied their petition not to pay the penalty," Paje told reporters. "But we're open to their request for third-party evaluation."

Water and sediment flowed into the river after leaking from a tailing pond at the Padcal mine in the country's north. Philex first discovered the leaks, which it said were not toxic, in early August after two weeks of heavy rains dumped by typhoons, prompting it to immediately close the mine.

Philex will make another appeal, saying it is not liable for the penalty because a fortuitous event caused the spill.

"We will appeal the decision," Michael Toledo, senior vice president and spokesman for Philex, said. "I understand Secretary Paje is open to another appeal or a proposal on how to go about this."

Philex was looking to resume Padcal's mining and milling operations by the second quarter of 2013, Toledo said.

In his letter, Jasareno said the Padcal incident was not a fortuitous event because the weather bureau had issued typhoon warnings. "PMC (Philex) had the opportunity to prepare and check the operations and stability of mine structures and facilities."

Philex shares, which have fallen 35 percent this year and around 5 percent since August, lost as much as 1.3 percent on Paje's statement. The main share index was little changed, having climbed 27 pct this year to record highs this week.

Last month Paje said the Padcal incident had convinced the government not to rush approval of mining projects, including the $5.9-billion Tampakan copper-gold project of global miner Xstrata Plc in the southern Philippines.

Project delays would rein in mining investment at about $500 million this year, Jasareno said on Thursday, less than a quarter of his previous forecast of $2.3 billion. ($1=41.1 Philippine pesos)

(Reporting by Erik dela Cruz; Editing by Clarence Fernandez)

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