Xstrata continues mine studies in Philippines

Manila has ambitious plans to develop the mining sector from a moribund state by attracting billions of dollars of foreign investment.

The Tampakan mine, considered Southeast Asia’s largest undeveloped copper-gold prospect, was opposed by local residents who feared the open pit mining method to be used by Xstrata’s Philippine affiliate Sagittarius Mines Inc would pollute a major river irrigating farms. Mine production is set to start in 2016.”

Source: Reuters, June 11 2010

Observations:

• Feasibility studies indicated the Tampakan deposit could sustain an annual average copper production of 340,000 tonnes per annum and 350,000 ounces per annum of gold, based on a 20 year operation (source: Infomine.com)
• Local government at Tampakan has banned open pit mining at the Tampakan deposit. Fears are that the large scale mining operation will pollute the local river on which water many farmers are dependent.

Implications:

• Local government might be overruled by national government. However, Xstrata will need to prove to the locals that the open pit mining operation will not lead to pollution of the river in order to change public opinion.
• Proving impact of mining on groundwater and river and influencing this impact is typically very difficult, as groundwater aquifers are very hard to map.
• Underground mining, which is favoured by the local government, reduces the need for lowering the groundwater level, but pollution risk from processing and waste/tailings is the same as with open pit mining.