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December 29, 2008

Philippine mine sector fears layoffs
Carmen Copper Corp. (CCC) is preparing to lay off several thousands of workers at the start of 2009 as the rehabilitation of its pits in Toledo City in Cebu nears completion, while London-based Toledo Mining Corp. (TMC), the owner of mines in Palawan, has already laid off 600 employees and contractors at its Berong nickel project after prices slumped, reported Bloomberg.

Toledo took the action “on the presumption of an extended period of poor demand and low nickel prices,” the company said in its interim results report released last week.

The price of nickel, used to make stainless steel for delivery in three months, has declined 63 percent this year to $9,700 a metric ton on the London Metal Exchange.

“Given the possibility of a prolonged recession, the board and management of TMC have resolved that the only responsible course of action is to manage the company’s assets on the presumption of an extended period of poor demand and low nickel prices.

Regrettably, this has meant laying off the vast majority of the work force at or servicing the Berong operations, some 600 workers and contractors in total,” TMC chairman Reg Eccles said in its report.

“The remaining staff in the Philippines now comprise a core team of sufficient skill mix to manage our nickel resources and to maintain the Berong mine and plant in good order,” Eccles added.

“The board of TMC is confident that the action it has taken, in conjunction with careful management of its financial resources and the support of its partners in Berong [which include Atlas Consolidated Mining and Development Corp.], will enable the company to weather the economic storm and be well-positioned to benefit from a market recovery,” Eccles said.

In Cebu, meanwhile, Toledo City Councilor Amuerfino Perales said the local government and the workers themselves were expecting the displacement.

“These layoffs, although painful, are already expected,” Perales told the BusinessMirror on Sunday. “Most of these workers were hired on a project basis to work on the rehabilitation of the mines and the city and now that the rehabilitation is almost finished, they have to be laid off.”

CCC vice president and resident manager Rodrigo  Cal has announced in Cebu that close to 3,000 workers will be cut off as the rehabilitation program of the 3,000-hectare mining facility in western Cebu is set to be completed in the first half of 2009.

Nearly 6,000 workers are currently employed by Carmen Copper in the rehabilitation of the mines—mostly as construction workers, machinists and laborers, Perales said.

The Toledo City government has an existing ordinance requiring businesses in the city to hire 70 percent of their workforce from local residents.

Perales said the displaced workers are being accommodated by the city manpower department for possible employment overseas. Since the layoffs were already expected, the city was able to prepare a program for the workers, Perales said.

“These are skilled workers who can easily find abroad if given enough training and assistance,” he said.

Carmen Copper earlier announced it will maintain around 2,000 to 3,000 workers as production of copper concentrate commences.

Perales said the city had been informed of plans of the company to hire more workers for other projects, but with low copper prices and the current global-financial crisis, he said the hiring could be postponed.

“The city government was told Carmen was supposed to operate on full capacity two months ago, and until now they have still to meet their deadlines,” Perales said.

The Toledo copper mine is projected to produce up to 130 million pounds of copper, 70,000 ounces of gold, 260,000 ounces of silver, 160,000 dry metric tons (DMT) of pyrite and 440,000 DMT of magnetite concentrates per year for at least 25 years.

CCC recently signed an off-take agreement with MRI Trading AG of Switzerland. It has also announced that it was ready to sell the first 10,000 DMT of copper concentrate of the 60,000 DMT of copper included in the deal.

Carmen Copper, which used to be Atlas Mining Corp, was the third largest copper concentrate supplier in the world with a capacity to produce 110 thousand tons a day at its peak in the 1980s.

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