rapu-rapu closure looms

Rapu-Rapu closure looms

By Elaine Ruzul S. Ramos

Rapu-Rapu Processing Inc., a unit of Lafayette (Phils.) Inc., said it might be forced to shut down its mining project in Albay province and incur investment losses of $259 million if resumption of operations was further delayed.

The company, in a letter to Ma. Cecilia Songco, chief of the mining division of the Board of Investments, said it had complied with all 21 conditions and remedial measures for the resumption of the project.

“If the restart of the project is subjected to further delays, despite having completed all the required remedial measures, the project may be forced to close down,” said Rapu-Rapu president Manuel Agcaoili in the letter.

He added the investment losses would amount to $259 million consisting of bank loans ($43.4 million), shareholder advances ($39.5 million) and bank hedging exposures ($176.1 million).

Banks with exposure in the project include NM Rothschild & Sons (Australia) Ltd., Australia and New Zealand Banking Group Ltd., ABN AMRO Bank NV (Australia), Investec Bank (Mauritius) Ltd. and Standard Chartered First Bank Korea Ltd.

Rapu-Rapu pegged the monthly overhead cost to maintain the project during the shutdown period at $2.7 million and foregone revenues at $13 million.

“Loss of employment if the project was forced to close would be approximately 1,000, including project employees, not to mention the P320 million spent yearly for food, supplies and salaries,” Agcaoili said.

Rapu-Rapu’s mining operations were shut down in October last year after a cyanide spill from its gold, copper and zinc mine that polluted a nearby river.

The first incident involved the spillover of processed slurry due to mechanical and human error, while the second involves the leakage of water tailings from the dam induced by heavy rain.

A fact-finding commission was created to “evaluate all the facts and circumstances surrounding the alleged threat to people’s health and environmental safety,” and submit a report by April 10, 2006.

Agcaoili said under the rules of the Pollution Adjudication Board, the company could resume its mining operations after complying with the conditions.

But the Rapu-Rapu Fact Finding Commission said the government should not allow a restart of the mining project until it had completed its report.