Photo of Manny (Photo credit: Wikipedia)Hong Kong-based First Pacific Co. Ltd. is ratcheting up its presence in the mining industry with plans to acquire two or three mining companies in the Philippines and Indonesia to support its goal to become a mid-sized global gold producer over the medium term.
During the Earth’s Resources Conference sponsored by Standard Chartered Bank in Hong Kong yesterday, First Pacific chief executive Manuel V. Pangilinan said the group is eyeing to produce one million ounces of gold a year in and outside the Philippines as it sees more upside potential for the precious metal.
Industry observers said gold remains a coveted asset given its long-term supply and demand dynamics. Continuing concerns about Europe’s financial problems and China’s reduced economic growth forecast made gold an attractive currency hedge.
“There’s a lot of promise out there but in many cases we have been unable to agree on price. Our preference is to invest in a mine that is already operating and already able to deliver to our bottomline,” Pangilinan said.
“You wont find us investing outside emerging Asia. We have a relative advantage in this part of the world so no matter how enticing a project in say, Australia, might look, we won’t go there,” he pointed out.
Pangilinan said the local mining firm they are targeting is already operating while its prospect in Indonesia has yet to commence operations. “The one in Indonesia will be bigger than the other one we’re looking at in the Philippines,” he said.
“Ideally, we will invest in a mine which produces two metals so that one metal subsidizes the production cost of the other. Our ambition over the medium-term is a four fold increase in ore production,” Pangilinan added.
He said First Pacific, through Philex Mining Corp., already operates the Padcal mine in Benguet, which currently produces 25,000 metric tons of ore a day. Down south in Mindanao, Philex has the Silangan mine which is expected to come online by 2016 with a capacity of 35,000 tons a day.
Since Pangilinan took the helm at Philex, the group has made several investments in the mining space which include a five-percent stake in Lepanto Consolidated Mining Co. and a joint venture agreement to develop and operate a mining property owned by Manila Mining Corp. Both Lepanto and Manila Mining are controlled by businessman Felipe Yap.
As far as the Recto Bank is concerned, Pangilinan reiterated his earlier position of taking in a foreign partner, preferable a Chinese company.
“You really need someone with experienced technology. The most logical thing is to to partner with a Chinese company like Chinese offshore oil producer CNOOC, PetroChina and Sinochem,” he said.
Pangilinan said he is open to taking in one or two large partners if the size of the field is large enough. “We want to enlarge the consortium beyond ourselves. The advantage of taking in partners is that it internationalizes and depoliticizes the project. It’s best if there is one or two more non-Chinese and non-Filipino partners in the equation,” he said.
http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=819569
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