Xstrata Plc (XTA) and other mining companies seeking to operate in the Philippines must wait for a new law before developing projects, President Benigno Aquino said as the government devises rules to take a bigger share of the nation’s natural resources.
“I don’t have confidence that the existing laws do adequately protect the environment or do adequately share the resource that belongs to the people of this country,” Aquino said today at a forum in Manila. “The safest position would be to await these new amendments.”
The Philippines stopped issuing new mining permits in January 2011. In July this year, Aquino extended the moratorium until Congress passes a law that will give the government a higher share of mining revenue. The Southeast Asian nation is among resource-rich countries seeking to boost its share of mineral wealth after attracting foreign investors including Australia’s OceanaGold Corp. (OGC) and Switzerland’s Xstrata.
Xstrata and Indophil Resources NL (IRN)’s $5.9 billion copper- gold project in South Cotabato province was denied environmental clearance in January because of a ban on open-pit mining. The mine is slated to produce an average 340,000 metric tons of copper and 350,000 ounces of gold a year for two decades starting in 2016. It will constitute the largest foreign direct investment in the Philippines.
Xstrata’s Sagittarius Mines unit, seeking to develop the project, said today it’s seeking approval for an environmental permit, which would allow it to seek further permits from the local and national authorities.
“Any decision to construct the proposed mining operation would depend on obtaining these required approvals as well as an investment decision by shareholders,” Sagittarius said in a statement. “If approved, the total tax and royalty revenues provided by the mine over its 20-year life are estimated at around $7.2 billion.”
The government plans to ask Congress to impose a royalty of as much as 7 percent on all mining projects, in addition to the 2 percent excise tax levied on the 33 mines in operation, Environment Secretary Ramon Paje said in July when Aquino signed the mining order. Lawmakers are unlikely to pass the changes into law this year, House Speaker Feliciano Belmonte said in September.
Waiting “seems to be the more prudent way to look at it,” Aquino said. “That’s the name of the game. Do I risk the environment, the health of our people, the loss of our resources for some temporary gain at this point in time?”
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