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A supplement to Mining Journal


A message from the MDC/DENR

government shares in mining taxes, fees and royalties. We also hope to expand the allocation for community development and provide funds for the conduct of information, education and communication campaigns for responsible mining. Moreover, the MDC will continue to work for the implementation of the Extractive Industries Transparency Initiative to ensure greater transparency in revenue collection and management. We will likewise continue to rationalise the implementation of small-scale mining laws, rules and regulations and strengthen the implementation of the streamlined permitting procedures. We expect the mining sector to continue facing more challenges in the wake of the global financial crisis. However, we are confident the MDC will be able to assist the industry seek innovative ways to overcome this hurdle. The MDC will not waiver in its mission of developing our mineral resources for the benefit of the country and the Filipino people. The tasks seem daunting but we have already begun some good actions, and we will not rest till we bring it to full completion.

CCOMPLISHMENTS are visions transformed into action. The accomplishment report of the Minerals Development Council (MDC) proves that the government and the private sector remain committed to the vision of revitalising the minerals industry as one of the means to conquer poverty. We have come a long way since President Gloria Macapagal Arroyo announced a policy shift from tolerance to active promotions of the industry in Year 2004. With the MDC as overall co-ordinator of the revitalization programme, we have promoted priority mining and exploration projects here and abroad, harmonised the implementation of some laws and policies affecting the sector, and engaged all stakeholders in continuous and meaningful dialogues. We have chosen to act on the issues and concerns outlined in the Minerals Action Plan that will promote an investment climate that is more conducive for business, while balancing out the interests of host communities, local governments and other stakeholders, and without sacrificing the quality of our environment. In the coming years, the MDC will remain focused on several action points including the development of an industrialisation programme through the development of services and supplier industries and of downstream processing for metal and manufactured products. We will continue to support the passage of the bill on the direct remittance of local

Message from the MDC 2 Introduction 2-3 Why invest in the Philippines? Mineral potential Climate Government Country overview 4-9 Mineral industry Government policies affecing industry Gold, copper and nickel Recent developments 10-12 MDC history 12 MDC directory 14 Cover image: Prospective ground for epithermal gold on Mindanao Island. Inset: Three photos of Philex Mining: the mine community; co-workers at the underground mine works; and the ball mill mill department Photos: Philex

Hon. Jose L. Atienza, Jr Chairman, Minerals Development Council, Office of the President, and Secretary, Department of Environment and Natural Resources

Published in September 2009 by: Aspermont UK Albert House, 1 Singer Street London EC2A 4BQ United Kingdom Tel: +44 (0)20 7216 6060 Fax: +44 (0)20 7216 6050 E-mail: editorial@mining-journal.com Website: www.mining-journal.com Supplement editor: Chris Hinde Design and production: Tim Peters, Printed by Stephens & George, Merthyr Tydfil, UK Aspermont UK 2009

Asian gateway
The Philippines is a natural gateway to the other Asia-Pacific economies, and has flourishing trade links with the region
Country information
Location: The Philippines lie in the western Pacific Ocean, just north of the equator, southeast of the Asian mainland, with Taiwan north and Indonesia to the south. Capital: Manila. Geography: The Philippines is the worlds second-largest archipelago after Indonesia. It consists of 7,107 islands, with a total land area of 299,764km2 . The interior is mountainous, skirted by lowlands and alluvial plains. The highest point is Mt Apo on Mindanao Island at 2,954m above sea level. According to the Philippine Institute of Volcanology and Seismology, there are more than 400 volcanoes throughout the archipelago, of which 22 are active, 27 are potentially active, and more than 350 are inactive. There are three major island groups: Luzon,Visayas and Mindanao.

HE country enjoys democracy, with a free market economy, and remains among Asia-Pacific regions top investment destinations owing to its liberalised investment policies and conducive investment environment. Investor interest in the domestic mining industry did not wane last year despite the global financial crisis. The strong demand for minerals and metals by China, India, Korea, Japan and other developing countries in the region has sustained exploration and mining activities in the Philippines. While there has been a reduction in the exports of nickel ore shipments, demand for the countrys other resources in gold, copper, iron ore, chromite and coal remained good. With prices of these commodities considered above break-even levels, a number of mining

operations started in late 2008 and early 2009, defying scepticism that has hounded commodity markets. The Philippines earned its high rating by posting economic growth averaging 4.4% annually from 2001 to 2006, the countrys best six-year average in the past 18 years. GDP growth in 2007 was a remarkable 7.1%, while there was a growth of 3.8% in 2008 despite the international difficulties. Interest rates have remained stable, and inflation has further eased in view of fiscal and monetary reforms. The Philippine government has deregulated the telecommunications, shipping, oil and energy, banking and insurance industries, and has a continuing economic and financial reform programme. Straddling the well-defined belt of volcanoes around the Pacific (the so-called Ring of Fire), the Philippines has the greatest number of proven deposits of metallic and non-metallic minerals among Southeast Asian countries.


Existing mining laws are attractive to investors. They allow co-production, joint venture, mineral production sharing, and financial or technical assistance agreements for large-scale mining projects. The current policy of revitalising mining has spurred renewed interest in the industry. The presence of major mining companies such as Anglo American, AngloGold Ashanti, BHP Billiton, CVRD, Phelps Dodge, Sumitomo Mining and Xstrata, attest to the allure of Philippine mining. The countrys private and government sectors are taking stock of the current metals market and the surging minerals demand of industrialising countries,

Mining Journal special publication Philippines

September 2009

notably from China and India, and the recovery of the Japanese economy. With the rest of the worlds significant economies likewise on an upswing, the prospects are bright for Philippine minerals. In a special report London-based Mining Journal wrote recently that over the past decade, and despite stiff competition from other countries for the exploration dollar, the Philippines has progressed significantly, and exploration activity has resulted in the discovery of a new generation of potentially world-class deposits, such as Tampakan (copper), Far Southeast (copper-gold), Boyongan (copper) and many others. They can be differentiated from previous discoveries that were of low grade and shallowseated.

Mining industry, benets to the economy

Gross domestic product and export growth (share of mining in gdp and total exports)
Year 1990 1995 2000 2005 2006 2007 2008 GDP (PP million) 721 803 973 1,211 1,277 1,369 1,432 (US$ m) 29.6 31.2 22.0 22.0 24.9 29.7 33.2 GVA/Mining Share 11,091 10,681 10,533 20,032 18,812 23,678 23,817 % 1.5 1.3 1.1 1.7 1.5 1.7 1.7 Total Exports Minerals Share % (US$m) (US$m) 8,126 723 8.8 17,447 893 5.1 38,078 650 1.2 40,263 1,084 2.7 47,410 2,756 5.8 50,276 3,299 6.6 48,202* 2,482* 5.2*

Source:NSCB and Bangko Sentral ng Pilipinas (BSP); * Preliminary

The Philippines covers some 30Mha but only less than 2% are presently covered by mining permits, and some 30% of the remaining area is regarded by the Mines and Geosciences Bureau to be geologically prospective for metallic minerals. As a result, there is an estimated 9Mha that has potential for metallic minerals. A large pool of Filipino professional geologists and mining engineers have extensive experience in mineral exploration and mining operations. A continuing scholarship and training programme is being implemented to address an increasing demand for skilled workers. Moreover, English is spoken and understood throughout the archipelago. The Philippines offers foreign investors a high standard of living at low cost. First-rate housing, hotels, schools and recreation facilities are found in Metro Manila and in major cities all over the country. Repatriation of the earnings and capital of foreign investors is guaranteed. Investors from various lands will find the Filipino people a happy mix of Asian and Western cultures. Among Asian countries, the Philippines is perceived to be the most westernised. But the tapestry of Philippine culture also threads other than Spanish and American-Malay, Chinese, Arabian, Indian and Japanese. These are the major cultures that streamed into Philippine history, along with influences from the English, the French, the Germans and the Dutch. Still, 110 ethno-linguistic groups scattered throughout the archipelago retain their distinctive identities and dialects.

Excise tax and royalties derived from mining

Year 1990 1995 2000 2005 2006 2007 2008 Excise Tax (US$m) (PP m) 30.0 730.0 6.8 174.5 5.6 243.3 4.6 251.3 9.5 489.6 23.8 1.1 14.8 660.3 Royalties (US$m) (PP m) 0.67 16.2 0.64 16.5 781.5 34.5 2.6 145.1 2.2 112.7 12.6 579.9 9.3 414.8 Total (US$m) (PP m) 30.7 746.3 7.4 191.0 6.3 277.9 7.2 396.5 11.7 602.3 36.4 1,679.9 24.2 1,075.1

Source:BIR and MGB/DENR

11% 30% 2%

Geologically prospective areas for metallic minerals Land area covered by approved mining tenements Other land areas in the Philippines Protected areas


Percentage of highly prospective areas in the Philippines climate can be divided into two major seasons: first, the rainy season from June to November, during the southwest monsoon; and, second, the dry season from December to May. The dry season may be further divided into the cool dry season (December to February) coinciding with the northeast monsoon, and the hot dry season (March to May). Straddling the typhoon belt, the Philippines experiences 15-20 typhoons yearly, usually from July to October. The typhoons move generally northwesterly from the Marianas and Caroline Islands in the Pacific, sparing Mindanao Island.

The Philippines is an independent democratic and republican state. Its government consists of three co-equal branches: the executive, the legislature and the judiciary. Executive power is vested in the President; legislative power in the bicameral Congress; and judicial power in the Supreme Court and other courts established by law. The President is elected by direct vote of the people for a single term of six years. In the Congress, the Members of the House of Representatives hold three-year terms, while those of the Senate serve for six years. Local government officials have three-year terms. The most recent elections for the Congress and local government officials were held in May 2007. The magistrates of the Supreme Court and of the lower courts are appointed by the President from the nominees of the Judicial and Bar Council, without need for congressional confirmation. Provinces are headed by governors, and cities and municipalities by mayors. The barangay is the basic political unit and is administered by a set of elective officials headed by the chairman, locally known as the punong barangay.

The Philippines has a tropical-marine climate, characterised by relatively high temperature, high humidity and abundant rainfall, similar in many respects to the climate of Central America. The mean annual temperature is 26.6C, except in Baguio City. The coolest month is January with a mean temperature of 25.5C; the warmest is May, with a mean temperature of 28.3C. Baguio City, at an elevation of 1,500m, has a mean annual temperature of 18.3C, earning its popularity as the countrys summer capital. The countrys average monthly relative humidity varies between 71% in March and 85% in September. Mean annual rainfall ranges from 965 to 4,064mm annually. Baguio City, eastern Samar and eastern Surigao receive the greatest amount of rainfall, while the southern portion of Cotabato receives the least. At General Santos City in South Cotabato, the average annual rainfall is only 978mm. Based on temperature and rainfall, the countrys

September 2009

Mining Journal special publication Philippines


Economy stays buoyant despite downturn

By Artemio F. Disini, Chairman

Drill technicians load core into trays for geological assessment at the Tampakan copper-gold mine project in the southern Philippines, in mid-2008
Photo: Indophil Resources via Bloomberg News

ESPITE the reeling effects of the global financial crisis, the Philippine economy posted a 3.8% growth in GDP for 2008, albeit lower than the previous years 7.1% record. Latest data for the Philippine economy shows that the country is holding its head above water, with real GDP growth remaining positive (0.4% in the quarter to end-March). Despite its small growth, the Philippines is one of only four countries in Asia able to post positive GDP growth in the first quarter of this year. The others are Indonesia,Vietnam and China. With exports accounting for only one-third of GDP, Standard Chartered Bank recently predicted

that, taken overall, the Philippines would be better insulated from the collapse of external demand compared with other Asian economies. The Philippine government remains optimistic that the economy will be better placed to weather recession in 2009, with GDP growth at 0.8-1.8%. Exports are expected to fall but the remittances of overseas workers will be about the same, or better, than for last year at US$17.0 billion.

The country has seen an upsurge in foreign mining investment since 2005, when the Supreme Court

Government policies affecting the mining industry

BoI approval The Board of Investments (BoI) has approved the governments 2009 Investment Priorities Plan (IPP). This incorporates mining initiatives, and adds to the plans to provide incentives to firms that would generate or save jobs in spite of the global economic slowdown. More efficient excise tax remittances An important, and much-awaited, government approval is the direct payment of the share of excise taxes to the local government units. After many years of lobbying by the Chamber of Mines (CoM), the different government agencies (represented in the Mineral Development Council; MDC), primarily the Departments of Environment and Natural Resources (DENR), Budget and Management (DBM) and Interior and Local Government (DILG), were able to finalise the rules (which will be implemented in 2010). The excise tax of metal revenues for 2009 will be paid to the different local government units (LGU) in March 2010. This new schedule of three months contrasts with the present two to three years. Accelerating permit approvals To facilitate investments in the mining industry, the old issue of the lengthy approval of permits had to be resolved. In July 2009, the DENR put in place a process of streamlining the permitting process to make it faster and more transparent. According to DENR Secretary Joselito Atienza, the permits for mining will be carried out in a period of seven weeks from the current minimum of 17 weeks. The environment compliance certificate (ECC) will be decided within three weeks from filing, compared with the current one year. While these efforts are being promoted during the latter part of the Secretarys tenure, it is still a welcome move for the industry. In 2005, the government officially changed its stance of mere tolerance to active promotion of the mining industry. The frequent changes of Secretaries, however, have hampered the implementation of effective long-term policies of the DENR. Cancellation of dormant mining claims The Department of Environment and Natural Resources has given instructions to the Mines and Geosciences Bureau (MGB) to review mining applications/permits that have not been active for five to ten years. This situation, according to the DENR, has a negative effect on investors, hence the necessity of the review. Dormant mining claims and tenements will be cancelled and restored to government ownership. To implement this policy, a three-stage notification process will be adopted. Cancellation of mining applications The CoM has expressed its grave concern over a DENR memoranda (dated March and May 2009) to the regional directors of the MGB directing it to deny all mining applications that have been rejected by indigenous peoples (IP). In a letter to the Secretary, the Chamber expressed concern about procedural ambiguities created by the memoranda that may undermine its efforts at promoting investments and competitiveness in the industry. The CoM requested that there should be clear guidelines on the procedures in obtaining Certification Precondition (CP) or Free and Prior Informed Consent (FPIC). It should also address the issue of when the non-grant of a CP or FPIC becomes final (ie no longer negotiable with IP). It should also include the possibility of compromise or of an appeal by the EP or mineral agreement applicant. The Secretary agreed to the drafting of procedures to address such concerns.

upheld the constitutionality of the Financial or Technical Assistance Agreement (FTAA) and the Mining Act of 1995. The law allows 100% foreign ownership in Philippine mining companies. Over 30 foreign companies have investments in the Philippine mining sector. These include the worlds largest mining company, BHP Billiton, Brazils Vale and Anglo American. Some 24 flagship projects are projected to be operational before 2016, and the Mines and Geosciences Bureau reported at least 50 exploration projects that have good potential for development. Mining in 2008 contributed 1.5% of GDP. The national target is to attain the 6.6% of GDP by 2011 (which would fix the Philippines firmly as a mining country. While it is still attainable, the target is likely to be delayed by at least three years due to the reduction in mining investments, and to delays in implementation of the larger projects. The government has scaled down its mining investment target for this year to about US$800 million, down from the original US$1 billion but still above last years US$650 million inflow.


During the past two years, numerous large Filipino corporations (or Filipino-based subsidiaries) have been drawn to the domestic mining sector. These organisations include First Pacific Co, San Miguel, Macroasia and APC. They were attracted to mining due to the governments support in developing the mining sector and the great potential of the various local metal deposits. First Pacific invested in Philex Mining Corp and acquired an initial 22% equity. It is currently carrying out a due-diligence study on Lepantos Far Southeast copper-gold project. San Miguel is in talks with various mining groups and is open to an array of opportunities. Macroasia is developing its nickel deposit in Palawan for direct shipping ore and is considering the construction of a processing plant. APC has coal projects in Isabela and Masbate, and nickel and gold prospects in Mindanao. These companies can readily finance the development of medium-sized projects. They are likewise familiar in dealing with groups opposing mining such as the Catholic Church, environmentalists and New Peoples Army (NPA). Being local companies they are more knowledgeable about local cultural sensitivities, and are more acceptable to the local communities.

Mining Journal special publication Philippines

September 2009

The production of gold fell by 8% from 38.8t in 2007 to 35.6t in 2008. The decline was due to a decrease in the gold produced by large-scale mining companies, whose output represented about a fifth of the countrys total production. Bangko Sentral Ng Pilipinas (Philippine Central Bank) reported that it had purchased 28.2t (about 80% of the countrys total production) from smallscale miners. The countrys gold production is projected to increase to 70t/y when the large copper-gold projects become operational in about four years. Two Australian companies, CGA Mining and Medusa Mining Ltd, are new performers in the gold sector. CGA Mining (formerly called Central Asia Gold Ltd) started commissioning its gold project during the first quarter of 2009. The project is the former Masbate gold mine that was operated for 14 years by Atlas Consolidated Mining Co until it shut in 1994. The project has indicated resources containing 3.3Moz and inferred resources of 1.77Moz, including a probable mining reserve of 1.98Moz of gold (at a cut-off of 0.7g/t). The projected annual production of 200,000oz is scheduled to be reached next year. Medusa Mining advised that it has completed a JORC-compliant ore reserve estimation for the Co-O mine in eastern Mindanao. It has an indicated and inferred resource totalling 1.38Moz. The probable reserve was estimated from an indicated resource of 1.25Mt at 15.0g/t gold, containing 603,000oz. This was the result of over 40,000m of drilling and over 6,000m of underground development completed in 2008. The Co-O gold veins are narrow but have the highest grade among the countrys operating gold mines. For its Runruno gold project, London-based Metal Exploration reported that it has defined a JORCcompliant inferred and indicated mineral resource of 2.0Moz gold and 34.4Mlb molybdenum, contained within 31.17Mt of ore at average grades of 2.00g/t gold and 0.05% molybdenum. Gold mineralisation is mostly found in the central Cordilleras, and most of the areas in Mindanao Runruno lies 320km north of Manila in the mineral rich province of Nueva Viscaya. The results of its recently-completed scoping/pre-feasibility study indicate its economic viability. It will have an annual production of 183,000oz gold and 1.7Mlb molybdenum. The capital cost is about US$208 million and the operation will have an average cash operating cost of US$285/oz after credits for molybdenum. The bankable feasibility study (BFS) on the Runruno project was launched last February,and is expected to take a year to complete. The BFS is expected to cost US$15 million. DENR has endorsed the companys FTAA application in respect of Runruno.

The country produced about as much copper last year as it did in 2007, at 22,565t. The Rapu Rapu polymetallic and Atlas Toledo copper mines became operational during the year. TVI completed its commissioning and began production during the first quarter of 2009. Due to the problems brought about by the economic crisis, the planned development of a mine by Oceana Gold has been deferred, and the project has been placed under care and maintenance. Switzerland-based Xstrata has announced the preliminary results of a two-year extended pre-feasibility study for its Tampakan copper and gold mine in Mindanao. The study was completed in April 2009 for Sagittarius Mines Inc (SMI), and confirmed a 2,200Mt mineral resource base initially

Victoria Mine
(10 MMt, 6.94 g/t Au)

Acupan Mine
(10.61 MMt, 2.46 g/t Au)

Panaon prospect
(7.7 MMt, 3.3 g/t Au)

Siana Mine

Sibutad Mine

(10.2 MMt, 8.10 g/t Au)

Diwalwal Project NDMC Prospects

(0.5 MMt, 9 g/t Au)

Masara Mine

Boringot Prospect

Bringing innovative, low-cost nickel heap leaching technology to the Philippines

The Acoje joint venture between Rusina and European Nickel in Zambales is trialing innovative heap leaching technology for nickel laterites. Developed by European Nickel as a low-cost and environmentally-friendly alternative to high-pressure acid leaching, the heap leach trial site will commence irrigation of the leach pads in third quarter 2009. The plant will produce a mixed hydroxide nickel product. A bankable feasibility study, examining a full-scale commercial plant producing around 25,000 tpa nickel, is expected to be completed in 2010. The project capital cost is currently estimated to be in the range of US$500 million, with an operating cost forecast of around US$3.10/lb of nickel.



Mining Journal special publication Philippines

September 2009

containing about 1,400Mt of mill feed. It has a proposed stage-one open-pit mining and milling rate of 44Mt/y, leading to a stage-two rate of 66Mt/y after three years. Tampakan will have a life-of-mine average production of 325,000t/y of copper for 20 years, with output expected to peak at more than 400,000t/y of copper and 310,000oz/y of gold. The mill recovery rates will be 83-90% for copper and 60-80% for gold, with a copper concentrate grade of 37-40% copper. The mine also has an operating cost base of less than US$0.60/lb of copper after gold credits. It has an initial stage-one capital expenditure of about US$5.2 billion. The schedule for start-up of commissioning and production is early 2016. Following the completion of the extended prefeasibility study, a US$74 million feasibility study was approved by the shareholders, which will entail a detailed engineering study. This study will determine whether the project will advance to development stage. SMI engaged the services of Bechtel, a global leader in engineering and construction, as the lead engineer for the Tampakan feasibility study. The study will be submitted to the government by the second quarter of 2010. The decision to develop a major mine at Tampakan will depend on the outcomes of the feasibility study, which will examine the projects economic, social and environmental viability. Philex Mining Co has bought the 50% stake of Anglo American in the Boyongan copper-gold project in Surigao del Norte for US$55 million. Philex


Ultramafic rocks and ophiolitic belts

Bully Bueno Prospect Batong Buhay Mine

(69 MMt, 0.59% Cu, 0.31 g/t Au)

Lepanto Enargite Mine ____________ Far Southeast deposit

(650 MMt, 0.65% Cu, 1.3 g/t Au)

Sto. Tomas II Mine

(449 MMt, 0.375% Cu, 0.7 g/t Au)

Dizon Mine

(187 MMt, 0.36% Cu, 0.93 g/t Au)

SULAT VMS Prospect

Copper mineralisation is likewise indicated mostly in the Cordilleras, and most of the areas in Mindanao
Boyungan deposit
(300 MMt, 0.6% Cu, 1.0 g/t Au)

Amacan Mine
(116 MMt, 0.37% Cu, 0.36 g/t Au)

Kingking deposit Tampakan deposit

(>1000 MMt, 0.7% Cu, 0.3 g/t Au) (400 MMt, 0.35% Cu, 0.6 g/t Au)

disagreed earlier with the results of Anglo Americans pre-feasibility study on the project. This study concluded that a mining operation based on the currently-defined resources, proposed mining and processing methods, assumed long-term copper and gold prices and estimated capital and operating costs, could not provide an acceptable rate on return on the project investment. The projected capital cost was US$750 million. Philex disputed the assumptions, and conclusions, made by Anglo American, and negotiated to acquire

the project. Philex is now carrying out more extensive exploration work in the sulphide zones of the Bayugo deposit, located north of the Boyongan orebody. The sulphide zones are easier to mine by block caving and a mooted single-stage flotation gives better metal recoveries. Philex plans to undertake a bankable feasibility study by 2010. The Boyongan project is expected to be operational before 2014, when the reserves of Philexs Padcal mine would have been mined out. Hong Kong conglomerate First Pacific Co (FPCL)

Consistently delivering value

Since establishment in 1992, Lycopodium has focussed on the delivey of high-quality, costr effective enginee ring and project management f services across a broad range of mineral commodities regardless of project scale or location. T To service the Philippines area, we offer: f Manila-based engineering and drafting teams Extensive feasibility study and project development experience Recent project development with Masbate and Rapu Rapu Current study involvement with Runruno
Contact: Brad Hannam or Steve Zaninovich T: +61 8 6210 5222 E: minerals@lycopodium.com.au W: www.lycopodium.com.au

September 2009

Mining Journal special publication Philippines


Mining Journal special publication Philippines

September 2009

acquired a 20.06% stake in Philex Mining for US$135 million in November 2008. It has since increased its stake to 22.0%. The Far Southeast project of Lepanto Consolidated Mining Co is a large, deep-seated copper-gold porphyry deposit, located below the enargite mine. In November 2007, Lepanto Consolidated signed a joint-venture agreement with Chinas Zijin Mining Group for development of the project. The latest information, however, stated that Zijin Mining has pulled out from the project. In May 2009, FPCL signed a Memorandum of Agreement with Lepanto to undertake due diligence on the Far Southeast project, with an exclusivity clause of three months. The due-diligence study is continuing, with the objective of FPCL acquiring a majority interest in the project. Concurrent to this study by FPCL is its due diligence on Manila Mining Corp with a similar aim to acquire majority interest of its mining projects. Manilas Kalayaan project lies at the northern extension of the Bayugo orebody, which is being explored in the Philex claims. Drilling undertaken by Anglo American at Kalayaan in 2008 confirmed these extensions. Surigao del Norte. The project cost has been reduced to US$1.1 billion from the original US$2.0 billion. Sumitomo, Mitsui and Sojitz are the Japanese partners of the Zamora Group that will construct the new HPAL plant. European Nickel plc has reported that test work at its Acoje joint venture with Rusina Mining NL in Zambales continues to have high recoveries and leaches rapidly in the column tests compared with many other deposits. The nickel recoveries are in the 75-80% range. The company announced that construction of the heap-leach trial site is progressing well, while construction of the heap-leach pad and ancillary facilities has been completed. The heap will be stacked to a height of about 3m and irrigation was due to start in October 2009. The project capital cost is about US$450 million, with an operating cost of about US$4/lb. A bankable feasibility study will be completed by mid-2010. Intexs plans aim at completing a definitive feasibility study and environmental permitting by year-end, and to start on engineering details in 2010, and a stage-one HPAL processing plant in 2013. The mine is in Mindoro. Pre-feasibility study estimates by Aker Solutions in June 2008 suggest operating costs of US$2.7/lb Ni for stage one and about US$2.0/lb Ni when stage two is included. The capital costs are US$2.2 billion and US$0.9 billion for stages one and two, respectively. The annual capacity was estimated to increase by 25% to 50,000t nickel metal, without a significant rise in capital expenditure. BHP Billiton and its Filipino partner Asiaticus Management Corp (Amcor) have decided to Nickel and nickel laterites are scattered in Luzon, Visayas and Mindanao


(23 MMt, 1.75% Ni)

(24 MMt, 1.68% Ni)





(11.5 MMt, 2.3% Ni)

(>500 MMt, 1% Ni)



withdraw legal cases against each other over the High international inventories of nickel, along with Pujada nickel project in Mindanao, according to the sharply reduced demand, resulted in a sharp fall in the DENR. The latters Secretary said BHP Billiton is not nickel price last year. Direct shipping ore (DSO) withdrawing its investments in the country as it exports from the Philippines to China fell 23% to agreed with Amcor to start from a clean slate. 5.67Mt in 2008. However, the market opened up Eramen Nickel has recently completed its mineral gradually in early 2009 when China started purchasing resource calculation and has an indicated resource of low-grade nickel ore (1% Ni) with high iron 108Mt with a grade of 1.21% Ni. The project, in content (over 45% Fe). However, the price of Zambales, lies adjacent to the Acoje mine. this DSO was only about US$10/t, and only a Eramen is currently studying the several options Annual mineral production few local mining companies (in Mindanao, which to operate the project with a processing plant. has a short hauling distance to the loading 2006 2007 2008 AIM-listed Toledo recently reported results ports) are able to operate at this price level. Gold (kg) 36,100 38,800 35,600 for the year to March 2009. It reported record Coral Bay Nickel successfully completed its Silver (kg) 23,500 27,800 12,700 production at its Berong nickel mine through expansion in the first quarter of 2009 with the Copper 17,200 22,900 21,200 October 2008. Shipments for the same period, doubling of its present capacity of 10,000t/y in Nickel ore (Mt) 3.58 6.20 7.38 to customers in Australia and China, were also the high-pressure acid leach (HPAL) plant to Nickel mixed sulphides (Mt) 8,200 10,100 10,600 higher than the comparable 2007 period. 20,000t. The capital cost of the expansion was Chromite ore (metallurgical grade) 25,000 16,600 13,500 Subject to securing sufficient profitable sales about US$295 million and the work was Chromite ore (Chemical) 16,800 11,700 1,700 contracts, the Berong mine can restart achieved within budget. The nickel and cobalt Chromite ore (refractory grade) 4,700 3,400 production at short notice. Longer term, Toledo metal recoveries have likewise been achieved at Coal (Mt) 2.597 3.830 3.950 aims to be major value-added nickel producer over 90%. Oil (bbl) 181,000 184,000 964,800 and is progressing its talks with European Nickel Asia will be announcing before the Condensate (000 bbl) 5,123 5,753 5,606 Nickel and Jiangxi Rare Earth and Rare Metals end of 2009 its decision to proceed with the Gas (billion ft3) 108,600 130,200 137,000 Tungsten Group about a possible heap-leach construction of a 30,000t/y HPAL plant in and processing operation at Berong.

September 2009

Mining Journal special publication Philippines


Untapped sector holds much promise

HE opportunities for development in the Philippines are vast, and the prospective entry of San Miguel Corp, as well as that of First Pacific, indicates that the relatively untapped sector holds a lot of promise. With a reported 7,100Mt of metallic minerals and 51,000Mt of non-metallic minerals waiting to be unearthed, downstream processing and manufacturing remains an area of immense potential. There has been record growth since 2005, with good performance in investments, production, tax revenues and exports. There has been an increase in mining company listings in the local bourse from less than four in 2004 to the current 15. The Philippine mining industrys growth in 2008 was subdued, largely owing to the decline in metal prices (especially nickel). The operations of Atlas Consolidated Mining and Development Corp (which has increased its production capacity recently), as well as the Masbate operation, somewhat cushioned the decline in nickel production. The value of total Philippine production was estimated at PP92.3 billion, reflecting the decrease in metal prices and a contraction of about 8.9% over the recorded total of PP101.0 billion in 2007. Total mineral exports in 2008, on the other hand, were estimated at US$2.5 billion, accounting for 5.2% of the countrys total exports of US$48.2 billion. Excise tax revenue from the mining sector reached PP1.1 billion in 2007, an increase of 125% from the 2006 figure of PP489.6 million. The figures for 2008 was only PP660 owing to the low commodity prices. Investment inflow from US$840 million in 2006 went up to US$1.4 billion in 2007 but settled back to under US$1 billion last year. However, MGB/DENR predicts that mining will be a US$13 billion industry by 2013. Some projects that were initially targeted to start in 2008 were reassessed, rescheduled and are now being repackaged to pare down capital expenditure. These include Sumitomos Taganito nickel plant, Global Steels expansion and Rusinas US$498 million HPAL project in Zambales. Demand for mineral commodities is still strong and since the US is now significantly less important in world commodity demand than it was five years ago, the repercussions of its downturn will not be felt heavily in the mining sector, which has already diversified its markets.

28 Mining Development Projects

Tampakan Copper Project Far Southeast Copper Project Boyongan Copper Project Carmen Copper Project Batong Buhay Copper Project San Antonio Copper Project Amacan Copper Project Rapu-Rapu Polymetallic Didipio Cu-Au Project Kingking Cu-Au Project Padcal Expansion Project

Itogon Gold Project Masbate Gold Project Teresa Gold Project

Diwalwal Gold Project Siana Gold Project Canatuan Au-Cu Project Masara Gold Project -Apex

Mindoro Nickel Project ACT Nickel Project Pujada Nickel Project CTP Nickel Project Palawan HPAL Project Berong Nickel Project Acoje PGE Nickel Proj. Nonoc Nickel Project Surigao-Sumitomo HPAL Manticao Ferro Nickel Iligan Ferro-Nickel

Akle Cement Project

There has been a structural shift in recent years that has favoured a rapid growth in those developing countries that have a large population (such as China and India, whose growth in 2008 can still be considered high). This trend is expected to continue as their population strives for material possessions. Growth in these economies and the rest of Asia will be resource-intensive due to industrialisation and urbanisation. Moreover, there have been positive indications recently that financial institutions and banks are more liquid, and the industry only needs to be innovative in accessing them through private equity, sovereign funds, retail investors, listing by way of introduction, dual listing and payment in kind. With the current operating investment environment, the Philippine government is expected to play a role in mitigating sovereign and political risk through cover and participation through sovereign guarantee to move the mining industry forward. This can be implemented through PhilExim, which provides guarantees on local and foreign loans to exporters to finance developmental projects and industries encouraged by government policy. Non-financial issues also need to be considered to A drill rig in the North Block of Rusinas Ajoce chromite project. Rusina is paring down its HPAL project in Zambales

The Philippine mining The industry is expected to be over the hump within the year as financial stimulus and economic rescue packages take effect. Philippine economic fundamentals remain strong
reduce risk and gain investor trust and confidence. These include the implementation of the Philippine Mineral Reporting Code (patterned after Australias JORC), more liberalised market-listing rules, and implementation and monitoring of corporate social responsibility (CSR). Local government units will now be given their share of the excise tax directly after the end of the first quarter of every year. Other corporate governance mechanisms are expected to gain leverage on mining projects. As partners in mineral resource development, the government accepts that it needs to play a role in risk participation, and to provide sovereign credit guarantees. These measures will enhance the investment environment and ensure the industrys growth. The government should also engage sectors that still have reservations about the revitalisation of the mining industry.

Being immersed in volatile market conditions typical of internationally traded commodities, the Philippine mining industry is expected to be over the hump within the year as financial stimulus and economic rescue packages take effect. Philippine economic fundamentals remain strong and this would definitely


Mining Journal special publication Philippines

September 2009

Partners AvelinoJ.Cruz,Jr. SimeonV.Marcelo SylvetteY.Tankiang BienvenidoI.Somera,Jr. JoeNathanP.Tenefrancia ManuelL.Manaligod,Jr. PatriciaA.O.Bunye AidaAraceliG.RoxasRivera JohnJericoL.Balisnomo ElmarB.Galacio DivinaGraciaE.Pedron F.ArthurL.Villaraza RaoulR.Angangco ElmaChristineR.Leogardo AlejandroAlfonsoE.Navarro AugustoA.SanPedro,Jr. SusanD.Villanueva RodelA.Cruz TheaT.Daep MiguelU.Silos RosaMicheleC.Bagtas FranchetteM.Acosta

SeniorAssociates Ma.JoycelynL.Guirnalda VictorE.M.Pangilinan PanchoG.Umali AldrichFitzU.Dy Associates ReneRaphaelA.Guina KristofferJamesE.Purisima LeslieMonicaG.Raymundo MarkHadrianP.Gamo JeanJacquelynA.DeCastro RowanieA.Nakan JaclynB.Gonzales RaymondG.Pasiliao LeonardoA.Singson Ma.SophiaE.CruzAbrenica CandyT.Avance CharlesEdwardM.Cheng FritzzieLynF.Espaol JuanitoL.Saosa,Jr. Ma.FrancescaQ.Baltazar JuliusGregoryB.Delgado KristinCharisseC.Siao StellaAngelaG.Pastores MariaCeciliaG.Natividad MichaelAngeloO.Lopez ChristianneGraceF.Salonga MarkFrancisP.Abaya KatrinaV.Doble RogelioD.Torres,Jr. CharisseJenS.Choa JosephAnthonyP.Lopez TaraAnnI.Vea KhristineC.Dy RuthNicholeR.Ureta WenceslaoB.Fernandez HeatherEzraC.Annang CharmianWyanetS.Zaragoza JonathanT.Pampolina ReezannKeithE.Ramos RamonManoloA.Alcasabas DavidsonRichL.Sih JacquesS.Lynn OliverP.Baclay,Jr. RegidorA.Ponferrada MariaKarenS.Olidan AbigailV.Go EstherRoseN.Rances RobertLeoC.Ty

118PereaStreet,LegaspiVillage,1229MakatiCity,PhilippinesI P.O.BOX3559MakatiCentral Tel.:(632)8189838;8189880;8189550IFax:(632)8167057;8171324;8944729 info@cvclaw.com I www.cvclaw.com

help keep the economy and the industry afloat. Judging from the interest shown by mining companies in accessing funds to finance pipeline and mature projects and those in the final feasibility stages, chances are strong that the various projects in the pipeline will push through after project reassessments. A surge in investments and production may be expected towards the end of 2010. With projects being rescheduled and the likely continuation of supply side difficulties, most commodity prices are expected to remain well above their long run levels over the short and medium term. Rescheduled projects are therefore expected to be implemented within 2010 to take advantage of price improvements. The availability of funding is crucial in ensuring the continuation of bullish sentiments and perspective in the industry. On the part of government, it has made commitment to do its best in resolving administrative issues, and is determined to provide the necessary support to revitalise the industry, particularly in Mindanao, where mineral resources abound. The government is also bent on transparency, and is working to enlist in the Extractive Industry Transparency Initiative (EITI), and also in streamlining operations to prevent corruption. Much remains to be seen but a lot of indicators point to a more stabilised metals market within the next few years.

Ampucao Proj.(Benguet) Paco Proj.(Surigao Norte) Tabuk Proj. (Kalinga) Gambang Proj.(Benguet)

Sogod Proj. (S. Leyte) Tagpura Proj. (Compostela) Hixbar Proj. (Rapu-Rapu Is) Manat Proj. (Compostela)

Colet Proj.(Negros Occ.) Claveria Proj.(Cagayan) Papaya Proj.(N. Vizcaya) Conner Proj. (Apayao)

Kingking Proj. (Davao Or.) Pantuyan Proj. (Leyte) Panag Proj. (Compostela) Batoto Proj.(Compostela) Del Gallego Proj. (Quezon) Mabuhay Proj. (Surigao Norte) Negros Proj. (Negros Or.) Kematu Proj. (South Cotabato) Alicia Proj. (Zamboanga Sur) Archangel Proj. (Batangas) Kalaya-an Proj. (Surigao N.) Hinonangan Proj. (S. Leyte) Pana-on Proj. (Leyte) Labo Proj. (Camarines Norte) Tongonan Proj. (Leyte) Nalesbitan Proj.(Camarines Norte) Surigao Proj. (Surigao N.) Cordon Proj. (Isabela) Pao Proj. (Nueva Vizcaya) Pantingan Proj. (Bataan) Road 5 M Proj. (Davao Or.) Agata Proj. (Agusan del Norte) Camp 3 Proj. (Benguet) TMC Proj. (Antique-Iloilo)

Acoje Proj. (Zambales) Sta. Cruz Proj. (Zambales) Berong Proj. (Palawan) Samar Bauxite Project, (Samar)

Pamplona, Negros Oriental

MDC enters its fifth year

Minerals Development Council Office of the Executive Director: 2/F DENR Building,Visayas Ave., Diliman, Quezon City, Philippines 1101 Tel: (+632) 9262628 Fax: (+632) 9264708 MDC Secretariat: 2/F Petrolab Building, Mines and Geosciences Bureau, North Avenue, Diliman Quezon City Telefax: (632) 9209123 E-mail: mdc_pilipinas@yahoo.com.ph

HE Minerals Development Council (MDC) was created by President Gloria Macapagal-Arroyo on October 11, 2005 when Executive Order No. 469 was issued to advance the government policy of responsible and sustainable development of the countrys mineral resources. As envisaged, it is empowered to enlist the assistance of any agency or instrumentality of the government, including government-owned or -controlled corporations, to harmonise requirements and procedures that would facilitate the inflows of investments into the mining industry. Since its inception, the MDC has evolved from being an interagency council that seeks to resolve the problems of the industry through policy reforms and investment promotions, into a more active and consultative body that addresses the policy and operational problems of the industry at the national and, recently, at the regional levels through the creation of the Regional Minerals Development Councils (RMDCs). The appointment of Secretary Jose L. Atienza, Jr. to the DENR came at a crucial time in the development of the Philippine mining industry. Before the creation of the MDC, the major bottleneck that hampered the resurgence of the industry was the conflicting and tedious requirements among the concerned government agencies in the grant of mining tenements. In recent years, however, the challenge for the mining industry is securing the social licence to operate from local government units (LGUs), host communities, civil society groups and the religious sector. Mr Atienzas experience as a former local chief executive, political and human-rights activist, and

pro-life advocate benefited the Council by attracting new dialogue partners in the governments advocacy for responsible mining. The MDCs active engagement with local government partners culminated in the inclusion of the LGU Leagues (eg League of Provinces, League of Municipalities, League of Cities and the Liga ng mga Barangay) as regular Council Members. Also, through its various activities, the MDC stood firm in balancing the interests of various stakeholder groups with the rule of law and the pursuit of national development goals. The Council addressed legitimate issues against some mining projects while carefully laying down the law when conflicts arise due to the different interpretation or implementation of the same law(s). The Council also tried to listen to dissenting voices opposed to mining by stressing that the governments programme is not for mining at all cost but only for responsible mining and that the economic, environmental, and social safeguards are in place to prevent or minimise the impacts of the exploration, development, and utilisation of the countrys mineral wealth. The MDC was equally challenged in Year 2008 by the escalation of armed attacks against some exploration and mining projects. The Council took an active stand by emphasising that the State owns mineral resources and that the mining companies are merely government contractors. It is also obligated to protect and defend the national interest. The MDC accomplishments were a collaboration of efforts of all the members of the council that includes individual members: the Department of Environment and Natural Resources, particularly the Mines and Geosciences Bureau (MGB), the

Presidential Adviser for Multilateral Development represented by Her Excellency, Ambassador Delia D Albert, Department of the Interior and Local Government (DILG), Department of Finance (DOF), National Economic and Development Authority (NEDA), Department of Trade and Industry (DTI), Department of Agrarian Reform (DAR), Department of Agriculture (DA), Department of National Defense (DND), Department of Labor and Employment (DOLE), Presidential Management Staff (PMS), National Commission on Indigenous Peoples (NCIP), National Anti-Poverty Commission (NAPC), Philippine Information Agency (PIA), Chamber of Mines of the Philippines (COMP), League of Municipalities of the Philippines (LMP), League of Provinces of the Philippines (LPP), League of Cities of the Philippines (LCP), and the Liga ng mga Barangay sa Pilipinas (LnB). The accomplishments which were translated in concrete terms are testament to the collective vision and action of the Council Members who believe that responsible mining can effectively contribute to the sustainable development of the country.


Mining Journal special publication Philippines

September 2009

September 2009

Mining Journal special publication Philippines


MDC directory
Department of Environment and Natural Resources (DENR) DENR Building,Visayas Avenue, Diliman, Quezon City NCR 1100 Tel: +63 (2) 928 0691 or 925 2329 Fax: +63 (2) 929 6628, 920 4301 www.denr.gov.ph Presidential Adviser for Multilateral Development (PAMD) Embassy of the Republic of the Philippines Uhlandstr. 97, D-10715 Berlin, Germany Tel: (030) 864 9500 Fax: (030) 873-2251 Department of the Interior and Local Government (DILG) A. Francisco Gold Condominium II, EDSA cor. Mapagmahal Street Brgy. Piahan, Diliman, Quezon City Tel: +63 (2) 925-2333 Fax +63 (2) 925-3843 www.dilg.gov.ph Department of Finance (DOF) DOF Building, BSP Complex, Roxas Boulevard,cor. P. Ocampo Street, Pasay City NCR 1004 Tel: + 63 (2) 523 5727, 525 1321, 524 1633 Fax: +63 (2) 523 5143 www.dof.gov.ph National Economic and Development Authority (NEDA) NEDA Building, 12 Saint Jose Maria Escriva Drive, Ortigas Center, Pasig City NCR 1605 Telefax: + 63 (2) 631 3734, 631 3739 www.neda.gov.ph Department of Trade and Industry (DTI) Industry & Investments Building 385 Senator Gil J. Puyat Ave., Makati City NCR 1200 Tel: +63 (2) 890-9332, 897-6682 Fax: + 63 (2) 895-3512 www.dti.gov.ph Department of Agrarian Reform (DAR) DAR Building, Elliptical Road Diliman, Quezon City NCR 1100 Tel Nos.+63 (2) 929-4101, 928-7031 loc. 406 Fax: + 63 (2) 922-8975 www.dar.gov.ph Department of Agriculture (DA) DA Building, Elliptical Road, Diliman, Quezon City NCR 1104 Tel: +63 (2) 920-2223 Fax + 63 (2) 929-8183 www.da.gov.ph Department of National Defense (DND) DND Building, Camp Aguinaldo EDSA, Quezon City NCR 1110 Tel. Nos. + 63 (2) 911-6268, 911-6460, 911-4438 Fax + 63 (2) 911-4360 www.dnd.gov.ph Presidential Management Staff (PMS) PMS Building, Arlegui St., San Miguel, Malacaang Compound, Manila Tel Nos. + 63 (2) 734-2206, 734-3971-75 Fax: + 63 (2) 734-2201 www.pms.gov.ph National Commission on Indigenous Peoples (NCIP) 2/F N. dela Merced Bldg. (DELTA) cor. West Ave., Quezon City Tel: +63 (2) 373 9787 Fax +63 (2) 373 9765 www.ncip.gov.ph National Anti-Poverty Commission (NAPC) 3/F, Agricultural Training Institute Building Elliptical Road, Diliman, Quezon City Tel: + 63 (2) 426 5028 Fax + 63 (2) 426 5249 www.napc.gov.ph Philippine Information Agency (PIA) Philippine Information Agency Building Visayas Avenue, Diliman, Quezon City Tel: +63 (2) 921 7941, 920 4386, 920 1224 Fax: +63 (2) 928 6917 www.pia.gov.ph Department of Labor and Employment DOLE Building, Intramuros Manila NCR 1002 Tel: +63 (2) 527-3000 loc.712 Fax: +63 (2) 527-3462 www.dole.gov.ph Chamber of Mines of the Philippines (CoMP) Rm. 809, Ortigas Bldg., Ortigas Ave., Pasig City Tel: +63 (2) 635 4123 24 Fax: +63 (2) 635 4160 www.chamberofmines.com.ph League of Municipalities of the Philippines (LMP) 2nd Floor LMP Bldg., 265 Ermin Garcia St, Cubao, Quezon City Tel: +63 (2) 913 5737, 913 5738 Fax: +63 (2) 440 7280 / 4407306 www.lmp.org.ph League of Provinces of the Philippines (LPP) 1510 West Tower, PSE Bldg. Exchange Road, Ortigas Centre, Pasig City Tel: +63 (2) 687 5399, 631 0170, 631 0197 Fax + 63 (2) 687-4048 www.lpp.gov.ph League of Cities of the Philippines (LCP) LCP Bldg. 1278 Estrada Corner Lemery Streets, Malate, Manila 1004 Tel: +63 (2) 521 6384, 521 6461 Fax: +63 (2) 521 7298 / 521 8239 www.lcp.org.ph Liga ng mga Barangay (LnB) 2nd Floor, Old Sanguniang Bldg. Caloocan City Hall Complex A. Mabini St. Caloocan City Tel: +63 (2) 2881653 Fax +63 (2) 324-5299 www.barangay.gov.ph Minerals Development Council (MDC) Secretariat 2nd Flr. Petrolab Building Mines and Geosciences Bureau North Avenue, Diliman, Quezon City Telefax: +63 (2) 920 9123 E-mail: mdc_pilipinas@yahoo.com.ph DENR- Mines and Geosciences Bureau (MGB) 2nd Flr. Fernandez Bldg., MGB Compound North Avenue, Diliman, Quezon City Tel: +63 (2) 928 8642, 920 9120 Fax: +63 (2) 920 1635 www.mgb.gov.ph DTI-Board of Investments (BOI) Industry & Investment Building 385 Senator Gil Puyat Avenue Makati City Tel: +63 (2) 890 9332, 895 3701, 897 6682 loc. 308 Fax: +63 (2) 895-3980 www.boi.gov.ph

Toledo Mining Corporation (AIM:TMC) is an emerging nickel producer focused on the economic processing of nickel laterites in the Philippines. The company has strategic interests in four large, good-grade nickel deposits on Palawan Island, with a combined pre-JORC resource base of more than 300 million tonnes, or 3.1 million tonnes of contained nickel. Toledo is also advancing its activities downstream in partnership with European Nickel and Jiangxi Rare Earth and Rare Metals Tungsten Group (JXTC).

For more information London office: +44 (0)20 7514 1480 Manila office: +63 2 817 7104 info@toledomining.com www.toledomining.com


Mining Journal special publication Philippines

September 2009

International standard for construction and mining

Leighton Asia offers its clients the highest standard of mining solutions. Operations were established in the Asian region in 1972 and in the Philippines in 1996. We are focused on continued success and growth in the region with local knowledge and international experience. Leighton Asia is part of the Leighton Group, the worlds leading contract miner, with over 60 years of global mining experience. We engage a team of committed engineering and management professionals coupled with a plant fleet we own, operate and maintain to offer our clients real mining and construction solutions. Leighton Contractors (Philippines), Inc. 7/F L.V. Locsin Building, 6752 Ayala Avenue corner Makati Avenue, Makati City Philippines t: +632 841 0998 f: +632 811 0158 e: info@leighton.com.ph www.leightonasia.com

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