SMI can’t touch the copper-gold pie at Tampakan

On the Philippine island of Mindanao, advancement of the Tampakan project — encompassing one of the planet’s largest undeveloped copper-gold deposits — remains in limbo following months of environmental opposition to a planned open-pit mine that would be the largest mine in the country, and one of the largest copper mines in the world.

Philippine-based Sagittarius Mines (SMI) owns and operates the Tampakan project, with SMI’s ownership split between a controlling 40% held by a joint venture between Xstrata (XTA-L) subsidiary Xstrata Copper (62.5%) and Indophil Resources (IRN-A) (37.5%), and a non-controlling 60% held by Tampakan Mining and Southcot Mining, collectively known as the Tampakan Group of Companies.

The 100-sq.-km project area is located in South Cotabato province in south-central Mindanao, and borders the similarly agricultural provinces of Sarangani, Sultan Kudarat and Davao del Sur.

The deposit and the stakes are enormous: Tampakan’s resource is pegged at 2.9 billion tonnes grading 0.51% copper and 0.19 gram gold per tonne gold using a 0.2% copper cut-off grade, for 15 million tonnes copper and 17.6 million oz. gold.

If the originally envisioned open-pit mine were to be approved, the Tampakan mine could produce an average of 375,000 tonnes copper and 360,000 oz. gold in concentrate over a minimum 17-year mine life.

But in January, the national government’s Department of Environment and Natural Resources (DENR) rejected SMI’s application for an Environmental Compliance Certificate (ECC), citing a 2010 ban on open-pit mining in South Cotabato by the provincial government.

At the time, SMI said it was “extremely disappointed” and would appeal the decision. SMI argued the environmental impact statement that formed a key part of its ECC application was “one of the most comprehensive environmental impact assessment studies ever undertaken in the Philippines,” and that its consultation process had taken two years and involved 9,000 stakeholders.

SMI further commented that the rejection “sets a precedent that contradicts the publicly held views of the Aquino Administration — namely that national laws which permit open-pit mining methods should have precedence over conflicting provincial ordinances.”

South Cotabato Governor Arthur Pingoy said to Philippine national news that “we don’t want SMI to stop” following the ECC rejection. Pingoy offered that “if they want to still go on with their project, we ask them to use other methods except open pit.”

In March, SMI general manager for external relations Mark Williams told a mining congress in Singapore that the company believed it would succeed if it pushes for an appeal, but added that “should [we] not be successful, SMI would need to reconsider its options.”

On June 6 Douglas Cagas — who governs the Davao del Sur province that would host Tampakan’s planned concentrator, freshwater dam and waste-rock storage — said to Zambo Times city newspaper that as long as SMI “remains committed to their promise of responsible mining” he supports the project, adding that the “national government recently pronounced that a responsible mining industry is one of our best hopes economically, and that is a positive sign for the Tampakan project.”

On May 31 SMI published its first media release — sounding off a 2011 sustainability report — since the ECC rejection in January.

SMI highlights its accomplishments in sustainability and has commented that “open-pit mining [is] the only viable method, given the nature and geology of the project.”

In a fact sheet showing SMI’s open-pit considerations, company highlights avoiding cave-ins and dodging potentially collapsible underground holes during rehabilitation after the mine closes. Open-pit mining Tampakan could “yield 50 to 70 million tonnes per annum,” which it mentions is twice the amount of a block-cave method that the company says it previously investigated alongside the open-pit method “over a number of years.” SMI continues that an open pit would make high-quality resources assessable first, produce greater resource use than underground mining and adds that ground conditions at Tampakan would call for extreme depths that would “significantly increase infrastructure costs, the development schedule and resource-extraction complexity.”

The company is firm that Tampakan’s large, near-surface potential makes an open pit the most feasible method and intends to avoid what it calls more dangerous, underground workings.

Despite SMI’s safety considerations, thousands of protestors from local communities, non-governmental organizations and church institutions say the planned open-pit mine would be risky and damaging in several respects: local geological fault lines could threaten pit stability; the local environment, agriculture and fishing industries, and food security would suffer; the number of Filipinos whose livelihood depends on the land — including farmers, fishermen and indigenous people — exceed SMI’s estimated 10,000 workers at peak construction, and 2,000 employees during operation; militarization and human-rights violations would rise near the mine, with police and military already enhanced since an SMI base-camp attack in 2008; and that the mine would displace indigenous and other communities such as the “barangays,” or villages, of Danlag, Pula Bato and Tablu. In an open letter on June 8 to Philippine President Benigno Aquino, Priest Joel Tabora further stated, ahead of several more bulleted arguments against the mine, that “the biggest hole in the Philippines will poison rivers” and that the mine area is “alive and teeming with bio-diversity,” including plants and animals that are endemic to Mindanao Island.

The non-governmental Philippine Center for Environmental Concerns charges that SMI is ­“aggressively” pursuing its own agenda despite the mine’s danger to people and the environment, and that “glaring poverty, backward agriculture and degraded lands would be further aggravated once mining operations commence . . . as they have in other places of the country.”

But SMI maintains that it has “complied with — and even exceeded — all the environmental assessment studies required by law.”

The company says it is working with the National Commission on Indigenous Peoples on obtaining consent and compensating the estimated 5,000 people who would be resettled from its proposed mine area. The company also says it would counter the open-pit mine’s environmental impact by “diversions, sumps and groundwater drainage facilities,” and that it would supervise operations before and after the mine in keeping pace with the ­region’s high rainfall, which could collect in the open pit and produce water “not suitable for drinking or recreation.”

SMI’s external relations unit adds that water filling the open-pit will be “recycled” or “intercepted both during and post-mining . . . such that flows in the Taplan River downstream of the mine will be similar to those receiving pre-mining,” and that “all water discharged from the mine area will be treated to ensure downstream water users continue to receive water that is suitable for all purposes.”

SMI offers that a conceptual rehabilitation and closure plan would be “progressively updated over the life of the mine project, taking into account the results from environmental monitoring and more detailed mine-closure planning.”

In its 2011 sustainability
report SMI highlights that it received its fourth esteemed Presidental Mineral Industry Environment award for outstanding sustainable development. During the year it also earned an Australia New Zealand Chamber of Commerce Corporate Social Responsibility Leadership award, and three business communication and public relations awards from the International Association of Business Communicators Philippines, the annual University of Asia and the Pacific Tambuli Awards and the Public Relations Society of the Philippines.

SMI reports that it spent US$103,100 in project training last year, engaged 393 employees and 888 contracters, paid US$8.4 million in wages, US$13.2 million in taxes and invested US$2.8 million on community development. Adding up the figures from sustainability reports dating back to 2007, SMI has spent US$6.7 million so far on community development consisting of partnerships, sponsorships and donations.

The company notes that it has altogether channelled US$41.2 million into the Philippines’ economy through employment, taxes, bought goods and services, community partnerships, sponsorships, donations and public infrastructure spending. It estimates an open-pit mine at Tampakan could contribute up to US$2.8 billion towards the country’s annual gross domestic product (GDP), or boost GDP by 1% each year.

Critics argue that two decades of mining at Tampakan would only temporarily solve the region’s economic troubles — the company says it does not offer a formal retirement plan, based on the “nature” of its project — and warn that permanent environmental damage could end self-sufficient living for local farmers and other resource-dependent Filipinos.

Environmental lawyer Luz Ramos told Philstar global news that “there is no such thing as responsible mining,” and that “mining spells destruction.” Ramos opined that the mine’s affected areas on Mindanao Island — which comprise six regions supporting nearly 22 million people, and endangered wildlife — would “remain destroyed.”

The Chamber of Mines of the Philippines points out that “denial of SMI’s ECC application may send mixed signals to the investment community” and “discourage potential investors in the country’s mining sector.”  

A 2011–2012 report on mining by Vancouver-based, free-market-oriented think tank the Fraser Institute ranked the Philippines a fifth-worst mining jurisdiction country for Policy Climate, which measures “attractiveness . . . from the point of view of an exploration manager.”

The Philippines was also ranked among the bottom-10 jurisdictions for “perceived corruption,” which the report says is “unfortunate,” as a “developing nation which most needs the new jobs and increased prosperity that mining can produce.”

If it gets the go-ahead from the respective levels of government, company shareholders and the affected Philippine communities, SMI still reckons it could get Tampakan into production by 2016.