February 25, 2014

Glencore Xstrata not abandoning Tampakan

Various news outlets reported today that contrary to earlier reports of Glencore Xstrata leaving the Tampakan consortium, the company is not divesting its stake in the mining project. The spokesperson for Sagittarius Mines (SMI), its local unit, was quoted as saying Glencore has given it theassurance that it will not pull out and will continue to support the project.

The purported pullout was due to an imposition by the Chinese government on Glencore to divest one of its major copper projects as it will have effectively cornered the majority of the world’s copper supply in its merger with Xstrata.

The SMI spokesperson also added that Glencore has more or less decided to divest its stake in the Las Bambas copper mine in Peru instead, in order to comply with the Chinese government requirements. Tampakan has yet to secure the necessary government permits to operate and has stalled largely due to an open-pit mining ban by the local government of South cotabato.

Our Take: While this comes as a positive newsflow on the sector, we still believe that government has yet to decisively firm up its policies on the mining sector lest this will potentially derail the biggest mining project in the Philippines and one of the biggest direct foreign investments in the country. – WealthSec