Patrick J. Waters, Anglo American Exploration Philippines Inc. (AAEP) exploration manager, told the Asia Pacific Mining Conference, Indonesia is apparently the more attractive investment site not only for its historical record for metal production but also in policy terms.
"Indonesia has the highest in prospectivity in the region. It has historic contract of work system and a proven attractive fiscal regime. It has excellent discovery track record, a successful development of world class mining operations. The Philippines has high prospectivity, (but it’s just) second in the region," he said.
Waters said that particularly bothering AAEP is a policy order by government indicating that companies intending to explore may only obtain an exploration permit (EP) that has a two-year duration, renewable up to six years.
"What we want is a set agreement that won’t change rules as you go along so you can have a model for (certain data as) cash flow…," he told reporters in a separate interview. "The exploration permit is good if you come in as a small company. But if you start exploration from grassroots, six years may not be enough if you do what we’re doing."
He said certain projects as those of Rapu Rapu of Lafayette, Didipio of Climax Arimco, and Tampakan of Indophil Resources are already "easy to bring to production" since ground-works had been completed or started.
But for an entirely new exploration project, a six-year term may not give assurance or certainty of long-term operations for a mining company like Anglo American that’s looking for a large mine. A world class prospect needs a considerable time for permit applications, geophysical explorations, surveying, drilling even prior to pre-feasibility and feasibility study.
He admits, though, that the new policy weeds out speculative applicants.
"It gets rid of nuisance claimants. At the same time, they didn’t think over the (adverse impact of) lack of certainty," he said.
The Department of Environment and Natural Resources (DENR) issued two months ago an order indicating entry point for exploration may only be through the EP.
Or if big enough covering 81,000 hectares and requiring a company’s $5 million capitalization, a financial and technical assistance agreement, (also requiring $50 million in development cost but allowing 100 percent foreign ownership), may be issued.
A mineral production sharing agreement (MPSA), a 25-year contract, only focuses on production.
He said anti-mining activities and the lack of transparency in bureaucratic decisions are also negative considerations for real major operations.
Waters admitted withdrawing part of its 50 percent stake in the Boyongan (with PHilex Mining Corp.) copper-gold project in Surigao gold district is an option arising from limited resource in the prospect.
"We have to decide whether we’ll remain in the project," he said.
While Boyongan coppergold has an inferred resource of 219 million tons, AAEP requires a project to have at least 500 million ton resource so as to mine it at economical costs.
To expand the resource, AAEP has been eyeing to take a stake from Manila Mining Corp.’s Bayugo prospect adjacent to Boyongan which may possibly provide the needed 300 million-ton resource.
"It’s possible. It’s to the best interest of everyone to find a large scale mine. It will be more beneficial to more people," he said.
AAEP, he said, continues to be committed to the Philippines and believes in its world class potential even as AAEP had already spent substantial investment to bring Boyongan to feasibility study (FS), although it hasn’t reached FS stage.
Anglo American has interest in 16 base metal (copper, nickel, zinc, niobium, titanium dioxide) operations in seven countries, particularly in Brazil, Chile, Ireland, Peru, South Africa, and Venezuela.
Anglo American’s exploration milestones in Indonesia includes discovery of the Purnama gold deposit at Martabe (1998); discovery of Aisasjur gold deposit in 1997, and its formation this year of strategic alliance with Austindo Resources to explore in Papua.
In the Philippines, it has interests in Central Cordillera where it holds an FTAA. It also holds five other exploration permits. In 2002, it purchased mining contracts of Newmont Exploration Philippines.
