Glencore cuts budget for $5.9 billion Philippine project – by Erik dela Cruz (Reuters U.S. – August 13, 2013)posted in Asia Mining, Glencore-Xstrata PLC, International Media Resource Articles |
MANILA – (Reuters) – Glencore Xstrata (GLEN.L) will cut up to 920 jobs and slash spending at its $5.9 billion Tampakan copper-gold project in the Philippines, one of several future mines under review since the company was formed in a record-breaking takeover.
Tampakan, a challenging project in a restive region of the southern Philippines, has not been officially put up for sale.
But, like many of the big-ticket mining projects previously held by Xstrata, it is under review by its new owners and is one of four projects Glencore has said it could sell 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 on Tuesday it had revised its work plan as the project still faced “substantial development challenges” – including a ban on open-pit mining in South Cotabato province.
That means it is unlikely to hit an already revised 2019 target for first production. “No investment decision can be made until the current project challenges are resolved and necessary approvals obtained,” Sagittarius spokesman John Arnaldo said.
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.
Australian miner Indophil Resources N.L. (IRN.AX), which has a 37.5 percent interest in the project, remains optimistic.
Chief Executive Richard Laufmann said Indophil was still in talks with trader and miner Glencore Xstrata over the revised work plan, and ruled out a shutdown of the Tampakan project.
“This modification of activity at what is a world-class minerals deposit is temporary and every effort will be made to restore the work program to its original plan,” he said in a statement.
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