Glencore Xstrata may sell off Tampakan stake, minority partner says

Global natural resources conglomerate Glencore Xstrata may divest itself of its majority interest in the $5.9-billion Tampakan copper-gold project in South Cotabato, its minority project partner said Thursday.

 

"Glencore Xstrata has advised Indophil of its preference to divest its stake in Tampakan. This is consistent with Glencore's preference not to develop greenfield projects, Indophil CEO Richard Laufmann said in the firm's quarterly report.

Tampakan is considered a greenfield project because it has yet to reach the production stage.

 

The divestment plan has yet to be formalized, however, and is still subject to discussion. Glencore Xstrata currently holds 62.5 percent of Tampakan operator Sagittarius Mines, Inc., while Indophil holds a 37.5-percent stake.

 

Indophil holds a "strategic pre-emptive right" over Glencore Xstrata's interest, giving it the right of first refusal in the sale of Glencore Xstrata's interest in the project.  

 

With Tampakan subject to a provincial ban on open-pit mining, Glencore Xstrata ordered SMI in mid-2013 to implement a revised work plan for the project that entailed a significant reduction in funding for the project as well as massive retrenchment of workforce. 

 

The plan for 2014 now sees total expenditure of less than $10 million with only 60 employees. 

 

The project activities would be focused on maintaining local community support and clarifiying with the Philippine government the process and timeline for the remaining approvals required for the Tampakan project. 

 

Indophil said it remains committed to maximizing the value of investment "either by development of Tampakan, 100 percent ownership of SMI or divestment." 

 

"Indophil has advised Glencore Xstrata that it is focused on restoring value to the Tampakan investment. We will work with  Glencore Xstrata to assist in meeting objectives for the project, and Indophil remains focused on doing what it can to ensure the project license conditions are not compromised in this process," Laufmann said in the report.  — JDS, GMA News