Philex considers open pit mining to cut costs in Philippines

25 June 2014 (Last Updated June 25th, 2014 18:30)

The Philippines' largest gold and copper producer Philex Mining is planning to convert its Silangan copper-gold project in Surigao del Norte to an open pit mine, to reduce project costs.

The Philippines' largest gold and copper producer Philex Mining is planning to convert its Silangan copper-gold project in Surigao del Norte to an open pit mine, to reduce project costs.

The company expects the open pit method to reduce the costs by almost two-third at the $1.5bn project, allowing production to start as early as 2018.

Philex Mining chairman Manuel Pangilinan said the company has formed a team to study the feasibility of the open pit method for the Silangan mine, as the presence of tough rocks and underground water makes underground mining undesirable.

"The decision to operate an open pit mine is likely to attract opposition from environmental groups."

"We have to dewater some parts of the ground. Other parts are also very muddy while some parts have hard rocks that are extremely tough," Pangilinan said.

Additional digging costs have increased the overall cost of the project by $500m to $1.5bn.

The decision to operate an open pit mine is likely to attract opposition from environmental groups, as it involves the release of toxic substances during extraction, wrote Reuters.

A local government has already banned Glencore Xstrata's $5.9bn open pit copper-gold project in southern Philippines, prompting the company to try and sell its stake in the project.

Meanwhile, Philex has set aside PHP4bn ($91.1m) for exploration works this year, with PHP3.2bn ($72.8m) of it being allocated for the development of the Silangan mine.

The company is also considering a partnership to fund and develop the Silangan project.

Energy