Glencore cuts budget for $5.9 billion Philippine project

Tue Aug 13, 2013 5:07am EDT
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By Erik dela Cruz

MANILA (Reuters) - Glencore Xstrata (GLEN.L: Quote) will cut up to 920 jobs and slash spending at its $5.9 billion Tampakan copper-gold project in the Philippines, one of several future mines under review since the company was formed in a record-breaking takeover.

Tampakan, a challenging project in a restive region of the southern Philippines, has not been officially put up for sale.

But, like many of the big-ticket mining projects previously held by Xstrata, it is under review by its new owners and is one of four projects Glencore has said it could sell to appease Chinese regulators' concerns over its dominance in copper - if it is unable to sell the Las Bambas mine in Peru.

Sagittarius Mines Inc, which is 62.5 percent-owned by Glencore, said on Tuesday it had revised its work plan as the project still faced "substantial development challenges" - including a ban on open-pit mining in South Cotabato province.

That means it is unlikely to hit an already revised 2019 target for first production.

"No investment decision can be made until the current project challenges are resolved and necessary approvals obtained," Sagittarius spokesman John Arnaldo said.

The fresh delay to what could be the biggest single foreign direct investment in the Philippines also reflects a challenging environment for investors looking to develop untapped mineral wealth in the country worth an estimated $850 billion.

Although the Southeast Asian country has won investment-grade ratings from Fitch Ratings and Standard & Poor's, policy uncertainty continues to hound the Tampakan project.   Continued...

The logo of commodities trader Glencore is pictured in front of the company's headquarters in the Swiss town of Baar November 20, 2012. REUTERS/Arnd Wiegmann