By David Stringer
OCEANAGOLD Corp. is targeting an expansion of its new gold operation in the US amid a dispute between mining companies and President Rodrigo Duterte’s government in the Philippines.
“There has been significant damage done to the reputation of the Philippines as a place to invest, and as a place for foreign investment, and I would put us in that category,” Chief Executive Officer Mick Wilkes said in an interview. “My investors would now prefer that they had less exposure to the Philippines than more exposure.”
In contrast, the company’s operation in South Carolina already fits in with President Donald Trump’s ‘America First’ ambitions, Wilkes said.
“It’s part of our formula–local hiring, use local businesses, maximize the benefits to the local economy,” he said. About 84 percent of the site’s 314 employees are from the local community, according to a filing this month.
Duterte’s Environment Secretary Regina Lopez wants to close 23 of the 41 metal mines in the Philippines, and suspend a further five, including Melbourne-based OceanaGold’s Didipio gold and copper operation. The government’s actions will likely be a deterrent to additional project spending by OceanaGold as well as other foreign miners and businesses, Wilkes said.
OceanaGold, the fourth-largest Australian gold producer by market value, last month filed an appeal against the suspension order and is continuing production as normal from Didipio, among the world’s lowest cost gold mines. It’s committed to retaining the asset and supports the nation’s efforts to improve the mining sector, Wilkes said. Lopez argues the industry damages the environment and typically fails to do enough to alleviate poverty in local communities.
Lawmakers ended a confirmation hearing Tuesday on Lopez without reaching a decision, prolonging uncertainty over her plans to close mines with a next hearing likely in May. A separate government review of mines threatened with closure or suspension could take as long as three months, Wilkes said in the interview Wednesday.
First gold was poured at OceanaGold’s Haile operation in South Carolina, where the company has the backing of key local officials, including Nikki Haley, now US Ambassador to the United Nations and previously the state’s governor, according to Wilkes.
“It’s certainly an easier place to operate and we have got a strong relationship with the government and the community there, that bodes well for the future,” Wilkes said. OceanaGold expects Haile to produce about 150,000 to 170,000 ounces of gold in 2017 and is targeting an expansion to lift annual output to as much as 250,000 ounces after 2020.
Wilkes also expects to maintain production levels in New Zealand, where the company has two operations, supporting total annual output for the producer of 500,000 ounces to 600,000 ounces through 2030, he said.
OceanaGold advanced 4.8 percent to A$3.97 in Sydney trading Thursday after the US Fed raised its benchmark rate as inflation approaches a 2 percent target. The producer has fallen 9 percent since the Philippines first announced plans to suspend some mines last September.
On Thursday, the Palace said Finance Secretary Carlos Dominguez was just doing his job as co-chairman of the inter-agency Mining Industry Coordinating Council when he stood firm against Lopez’s appeal to suspend a review of her closure orders.
Presidential Spokesman Ernesto Abella said Dominguez has yet to talk to President Duterte, who said he was inclined to heed Lopez’s call to suspend the review.
Before a caucus of the Commission on Appointments committee on environment and natural resources, Dominguez said there was a lack of due process when Lopez ordered the closure or suspension of 28 mining companies.
Dominguez also warned that it would take five years to cover the government’s revenue shortfall from Lopez’s decision, adding they would have to look for more revenue sources to cover the shortfall.
He said the government collected P20.6 billion in taxes from mining in 2012, P24.4 billion in 2013; P32.7 billion in 2014; and P29.57 billion in 2015.
Also on Thursday, the Court of Appeals has dismissed the appeal for an environmental protection order or Writ of Kalikasan against the operation of a gold mine in Aroroy, Masbate, after it found the allegations raised by an environmental group were all untrue.
In a March 8 decision, the CA’s 4th Division through then Associate Justice Noel G. Tijam, who was just recently appointed as member of the Supreme Court, denied the plea for the kalikasan writ against Filminera Resources Corp. filed by Ang Aroroy Ay Alagaan Inc. and four private citizens.
The CA said the petitioners had failed to substantiate their claims that the mine’s operations had affected the environment in and around the municipalities of Aroroy and Baleno in Masbate or that these had any impact on the petitioners’ livelihoods. With John Paolo Bencito, Rey E. Requejo, Bloomberg
