more detailed reuters article (Recasts with comments by...

more detailed reuters article (Recasts with comments by environment secretary)
By Rosemarie Francisco
MANILA, June 13 (Reuters) - The Philippine government said on
Tuesday it would allow Australia's Lafayette Mining Ltd.
to reopen its zinc and copper mine on Rapu-rapu island for a
30-day test run after two cyanide spills in October.
President Gloria Macapagal Arroyo is pushing a revival of the
mining sector to bring in foreign investment and reduce poverty
but has come under pressure from influential Roman C atholic
bishops voicing concerns about the environmental impact.
Environment Secretary Angelo Reyes said the test run, if
successful, would lead to the full reopening of the Lafayette
mine in Albay province, 350 km (220 miles) southeast of Manila.
Lafayette shares jumped 10 percent to A$0.11 on Tuesday
afternoon after hitting a three-year low of A$0.081 earlier this
month.
A fact-finding committee looking into the spills, chaired by
a bishop, called in May for the permanent closure of Lafayette's
operations, a moratorium on mining on Rapu-rapu and a review of
100 percent foreign ownership of local mines.
"The Department of Environment and Natural Resources feels
that the best option is to allow Lafayette to resume operations
subject to certain stringent pre-conditions," Reyes told a news
conference.
Reyes, criticising Lafayette for operational and technical
lapses, said the conditions included payment of a fine of 10
million pesos ($188,000), extension of the company's surety bond
and improvements to its storage facility.
The test run by Lafayette, the first foreign firm to develop
and run a mine in the Philippines in almost 40 years, will seek
to determine production efficiency and the company's ability to
respond to emergencies.
"I believe if they allow us to test then we will pass,"
Carlos Dominguez, head of Lafayette's Philippine operations, told
Reuters before Reyes made the announcement. "The restart will
allow us to have a revenue stream again."
Earlier on Tuesday, a government source had told Reuters
about the plan to allow the test run.
Lafayette said recently its creditors had stretched the terms
on its loans amounting to about $189 million as it waited for the
government's decision on the fate of the mine.

"GROSSLY UNFAVOURABLE"
Reyes said Lafayette had substantially complied with 21
remedial measures imposed by the government since the spills.
But he said the spills were preventable and Lafayette's local
operations had not measured up to industry standards. He added
that the environment department failed to adequately monitor the
Rapu-rapu mine or detect the violations that led to the spills.
The mineral exploration on Rapu-rapu had also been "grossly
unfavourable to the Philippine government" due to the granting of
several incentives to Lafayette, Reyes said.
The government's conclusions hewed close to findings by the
committee that had looked into the impact of the cynanide spills.
According to some estimates, the Philippines has $1 trillion
in mineral wealth. But many foreign firms have been put off by
political turmoil, corruption, insurgencies in the resource-rich
south and opposition from bishops and indigenous groups.
($1 = 53.2 pesos)
((Editing by John O'Callaghan; [email protected];
Reuters Messaging: [email protected];
+63 2 841-8937))
Keywords: MINERALS PHILIPPINES LAFAYETTE


Tuesday 13 June 2006 15:52:27 AEST