Glencore cuts budget for $5.9 billion Philippine project
Spending and jobs will be cut by Glencore Xstrata at its the $5.9 billion Tampakan copper-gold project in the Philippines, Reuters reported.
The project has faced a number of challenges, including a ban on openpit mining, leading the newly formed mining giant to reconsider its plans for the mine which could include slashing as many as 920 jobs.
Glecore Xstrata could sell the mine to appease Chinese regulators’ concerns over its dominance in copper - if it is unable to sell the Las Bambas Mine in Peru.
Sagittarius Mines Inc, which is 62.5 percent-owned by Glencore, said it had revised its work plan as the project still faced “substantial development challenges.”
“No investment decision can be made until the current project challenges are resolved and necessary approvals obtained,” Sagittarius spokesman John Arnaldo said.
That means it is unlikely to hit an already revised 2019 target for first production.
The revised work plan and budget will result in an 85 percent reduction of the workforce, affecting about 920 jobs. Monthly expenditure will be cut to $1 million from $4 million, Arnaldo said. To date, Sagittarius has spent more than $500 million for the initial phase of the project, he said.
Discovered in 1992, the Tampakan mine is predicted to have a 17-year lifespan with estimated deposits of 15 million tons of copper and 18 million oz of gold.
In December last year, Sagittarius announced it was pushing back the target date to start production at the Tampakan mine by three years to 2019 as it struggled to win regulatory and community approvals.
Three months later, Sagittarius was granted an environmental compliance certificate by the government, removing just one of the hurdles delaying work on the project.
The fresh delay to what could be the biggest single foreign direct investment in the Philippines also reflects a challenging environment for investors looking to develop untapped mineral wealth in the country worth an estimated $850 billion.
Although the Southeast Asian country has won investment-grade ratings from Fitch Ratings and Standard & Poor’s, policy uncertainty continues to hound the Tampakan project.
Glencore has made no secret of its lack of appetite for costly greenfield projects - mines built from scratch - but local difficulties have long held back Tampakan.
A provincial ban on openpit mining has been in place since 2010, although it runs counter to the national mining policy, compounding the difficulty of getting necessary approvals.