Xstrata Exploration Camp Burned Down

Sydney Morning Herald

Thursday January 3, 2008

Jamie Freed

THE burgeoning mining industry in the Philippines received another setback on Tuesday when armed rebels torched an exploration camp at the large Tampakan copper-gold joint venture between Xstrata and Melbourne's Indophil Resources on the island of Mindanao.

A spokeswoman for Xstrata Copper, Sue Sara, said a skeleton staff of six locals was on site over the holiday period and no one was injured.

Philippines police pointed to the New People's Army, the militant arm of the Communist Party, as the likely culprit.

But Ms Sara said it was worth noting that no group had claimed responsibility for the attack. "We're just all surmising at this point," she said.

The Tampakan project ranks as one of Xstrata's key copper growth projects. Xstrata owns 62.5 per cent of the joint venture and manages the project.

Tampakan should produce about 200,000 tonnes of copper concentrate or cathode and 200,000 ounces of gold a year from an open pit mine starting in late 2012.

In an investor update last month, Xstrata Copper's project development head Peter Forrestal noted the current feasibility study recognised "the enormous potential of the project and ... the complexity and sensitivity of a development in that location". There are also technical challenges including the high arsenic content in some areas of the ore body and tailings disposal in a populated area with high rainfall.

The Philippines, which in 2005 ended a decades-long ban on mining projects, has proved a difficult operating environment for Australian miners. Lafayette Mining went into voluntary administration last month when it was unable to finalise a rescue financing package. Lafayette's Rapu Rapu polymetallic mine was beset by problems from the start, including an environmental incident that closed the mine for a lengthy period.

Oceana Gold, which is developing the Didipio gold-copper project, was the subject of an unflattering report by Oxfam Australia on its community relations policies in October. Oceana denied the report's claims.

But despite the difficult operating climate, the Philippines is one of the world's most prospective areas in terms of geology. BHP Billiton has been exploring for nickel laterite deposits in Mindanao, about 300 kilometres from Tampakan.

Ms Sara said the attack at Tampakan this week would not discourage the project's development. "We're still very committed to the project."

© 2008 Sydney Morning Herald

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