By Alex MacDonald and Ian Walker
LONDON--Commodities titan Glencore PLC (GLEN.LN) said Wednesday
it has agreed to sell its remaining 62.5% stake in the long-delayed
and troubled $5.9 billion Philippine Tampakan copper-gold project
for an undisclosed sum.
The Baar, Switzerland-based trader and producer of commodities
ranging from coal, zinc, copper, oil and grains had stated as early
as in 2013 its desire to exit the greenfield project, alongside
other projects, since the company didn't want to spend billions of
dollars developing projects from scratch that could face
significant cost overruns and construction delays.
Glencore inherited a stake in the project when it acquired
Anglo-Swiss miner Xstrata PLC that year. The Tampakan project is
located on the southern island of Mindanao and was due to start
commercial production in 2019 but has faced setbacks ranging from a
provincial ban on open pit mining and difficulties in securing
consent to resettle affected communities.
The project also faced allegations of funding the military in
exchange for protection after the project suffered two attacks from
the armed wing of the Philippines' Communist Party in 2008.
Glencore said the project's operator, Sagittarius Mines Inc.,
provided funds at the behest of the local government and only for a
community-based food, fuel and first aid program run by civilians;
the death of a mining activist at the hands of the military wasn't
related to Tampakan and all funds that supported the military
ceased in 2013, it added.
The project is owned by SMI, a joint venture that is 37.5% owned
by Australia-based Indophil Resources NL and 62.5% owned by
Glencore.
Philippines-incorporated Alsons Prime Investments Corp. acquired
the remaining shares it didn't already own in Indophil in January,
valuing Indophil's equity at $361 million. Glencore, which owned a
13.1% stake in Indophil voted in favor of that deal.
Glencore is now seeking to sell its direct SMI stake to Alsons'
Indophil to complete its exit from the project. Glencore didn't
disclose the details of the agreement but said it was subject to
certain conditions that must be secured before June 30.
The Tampakan project was previously forecast to be a low-cost
copper and gold mine, producing an average of 375,000 tons of
copper and 360,000 ounces of gold annually over its initial 17 year
operating life. The mine was forecast to boost the Philippine's
economic output by 1%, according to presentation on Indophil's
website.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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