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MERGER

Glencore Xstrata lays off workers at stalled mine

Swiss mining giant Glencore Xstrata is laying off more than 900 workers at its $5.9-billion copper project in the Philippines after regulators stalled the mine development.

Glencore Xstrata lays off workers at stalled mine
Photo: Sebastian Derungs/AFP/Getty Images

The Tampakan mine is cutting costs while it undergoes "an extremely complex and uncertain pathway to ultimate project approval", spokesman John Arnaldo of Glencore Xstrata unit Sagittarius Mining said on Tuesday.

"At present, the project faces substantial development challenges . . . no investment decision can be made until the current project challenges are resolved and necessary approvals obtained," he told AFP.

He said the hurdles include a local government ban on open-cut mining, while the company must also still obtain a substantial number of community and government permits.

Out of 1,060 workers, the company is dismissing 300 regular and project employees and about 620 contract workers, said Arnaldo.

Under its revised work plan, the company will still be spending about $1 million a month, down from its previous 2013 work plan of $4 million a month, he added.

Sagittarius describes the Tampakan project, on the major southern island of Mindanao, as one of the world's largest undeveloped copper and gold deposits.

The project would be the Philippines' largest ever foreign investment but it has been opposed by anti-mining activists, tribal groups and even church leaders.

Arnaldo said the company has so far invested more than $500 million in developing Tampakan, and had hoped early approvals would allow it to start commercial production by 2019.

The Philippines is believed to have some of the world's biggest mineral reserves — the government estimates the country has at least $840 billion in gold, copper, nickel, chromite, manganese, silver and iron ore deposits.

However, the minerals have been largely untapped, partly because of a strong anti-mining movement led by the influential Catholic Church.

Poor infrastructure and security concerns have also kept investors away.

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MINING

Glencore in black despite low commodity prices

Swiss mining and commodities giant Glencore was back in the black in 2014, posting a $2.3 billion net profit, but took a $1.1 billion impairment charge on dwindling commodity prices, it said on Tuesday.

Glencore in black despite low commodity prices
Photo: AFP

The healthy profit comes after the Swiss company suffered an $8 billion loss a year earlier.
   
However, taking into account the group's absorption of another Swiss mining giant Xstrata, the company saw its results on a comparable pro forma basis slip seven percent from the year before.
   
The merger with Xstrata and integration of Canadian company Viterra meanwhile helped boost Glencore's trade, and the company said its adjusted earnings before interest, taxes, depreciation and amortisation, swelled 18 percent to $2.8 billion.
   
But Glencore, headquartered in Baar in the canton of Zug, took a $1.1 billion impairment charge amid plunging commodity prices, especially in the energy sector.

The company warned last month that because of "volatile" market conditions, it aimed to slash its spending this year to $6.5-6.8 billion, down from the $7.9 billion announced to investors in early December.
   
Glencore, which has a heavy footprint in copper, coal and oil, as well as in the agriculture commodities sectors, also said it aimed to reduce its coal mine activities in South Africa and in Australia.
   
"Our ultimate goal remains to grow our free cash flow and return excess capital in the most sustainable and efficient manner," Glencore chief
executive Ivan Glasenberg said in the earnings statement.
   
"As the most diversified raw material producer and marketer, Glencore is well positioned to react to and benefit from changes in commodity
fundamentals," he added.
   
The company's board aims to propose hiking the dividend paid to shareholders by nine percent to 18 cents a share, the company said.

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