Philippine gold mine attracts Newmont

Philippine gold mine attracts Newmont

Newmont Mining, the world’s third-biggest gold producer, may join overseas companies bidding to run a Philippine gold mine in a process that is set to start within six weeks.

“Newmont has expressed interest in the Diwalwal mine,” Artemio Disini, president of the state-run National Resources Development, said in phone interview Tuesday. Calls to Newmont’s main office in Denver were not answered.

President Gloria Macapagal Arroyo of the Philippines has said she wants to attract overseas investment in mining to boost growth, capitalizing on surging demand for metals. The Southeast Asian nation’s mineral wealth may be worth up to $1 trillion, the government said in March. Gold prices have climbed 27 percent in the past year.

“This is terrific development because these investors will put in the capital to mine Diwalwal properly,” said Peter Wallace, director for the Australian- New Zealand Chamber of Commerce in the Philippines. The interest of overseas investors in the project “is positive for the country and another signal of confidence.”

Mount Diwalwal, located in Davao del Norte Province in the southern Philippines, has $18 billion of gold reserves, the government said in November 2005. Harmony Gold Mining, the third- largest African gold producer, and at least four other overseas miners, may also bid, Disini said in September. He did not name the other mining firms.

National Resources Development, created in 2003, is a Philippine state- run corporation that handles the exploration, development and mining of mineral deposits in the country.

As many as 30,000 small-scale, independent miners used to operate at Diwalwal, which covers over 5,000 hectares, or 12,355 acres. The government took over the site in August 2002 after a blast killed five workers and trapped dozens of others.

More mergers expected

The plan by Freeport-McMoRan Copper & Gold to buy Phelps Dodge for $25.5 billion may signal the mining industry’s yearlong buying spree is far from over because of lofty metals prices and a shortage of new mines.

As many as 975 mining mergers and acquisitions worth more than $157 billion have been proposed this year, according to data compiled by Bloomberg. The purchase by the New Orleans- based Freeport, announced Sunday, would be the largest ever. There were 875 transactions worth $94 billion in all of last year.

“The whole sector is wide open,” said Martin Potts, a mining analyst at Teather & Greenwood in London. “I don’t think M&A in mining has peaked. It’s going to continue for a while.”

Metal-price increases are swelling corporate coffers, encouraging companies like Cia of Brazil, Vale do Rio Doce and Xstrata of Switzerland to get bigger as more of the world’s metal and mining resources are concentrated in fewer hands. Nickel and zinc have doubled in price this year. Copper has climbed more than 50 percent.

Potts said “super juniors” like First Quantum Minerals, a Vancouver-based copper and gold producer, and even Anglo American, the world’s third- biggest mining company, may be candidates for purchase.

“Any company with good development portfolios could be snapped up quickly,” Potts said.

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