The Rapu Rapu Polymetallic Project on Rapu Rapu island in the South East of the
The expected life time of the mine is eight years but exploration is underway to extend the expected life time. the mining company has exploration leases that cover over 80 percent of the island surface.
company / companies involved
The project is undertaken by a joint-venture company, Lafayette Philippines Inc., which is owned by: Lafayette Mining LG (
The project is managed by the Australian mining company Lafayette Mining, which has no other projects at hand. Lafayette Mining is listed at the Australian Stock exchange (LAF) Since august 1997.
financial institution(s) involved / actively interested
SC First Bank
Project finance provided in 2004
The mining project is funded by the following financial stakeholders:
- Lenders group (see above)
- LG International KORES, Korean state companies
- ANZ Bank (Lease contract for power station)
The Australian mining company Lafayette Mining owns 74% of
- Lion Selection Group Limited (12.32)
- ANZ Nominees Limited(6.183)
- AuSelect Limited (4.634)
- Mr Vijay Vijendra Sethu (3.056)
- HSBC Custody Nominees (
) Limited (2.719) Australia
- Zero Nominees Pty Ltd (1.253)
- Citicorp Nominees Pty Limited (1.252)
- Standard Bank PLC (1.019)
- Diemar & Associates Pty Limited (0.978)
- South East Asian Strategic Assets Fund LP (SeaSaf) (0.803)
The current ownership structure is soon to change, see below.
Since its inception, the project has met with fierce resistance from the local communities, supported by a coalition of NGOs, church groups, fisher folks, local government bodies and international campaign groups. Concerns focus on:
- Inadequacy of environmental and social impact assessment process
- exposure to typhones, as situated right in the Typhone belt, with three typhones hitting the island in second half of 2006 causing extensive damage to the mine site
- Serious toxic spills in past and related findings of negligence and breaches of basic industry practices
- Unresolved community impacts and questionable social acceptability as reflected in widespread opposition to the mine
- Direct and long term environmental impact of the mine, through Acid Rock Drainage, toxic discharges, long term solidity of tailing dam design, direct impact on island and aquatic biodiversity
- Effect on emerging ecotourism industry based on whale shark watching
- Undue pressure on government structures and militarisation of island, associated human rights issues
- Tax and revenue issues
Equator Principles should apply to this project.
Other applicable policies:
ABN AMRO sector policy on mining should apply to the operation. The bank lender group (ANZ, ABN AMRO, SC First bank and others) that until end of november 2007 is involved in the mining project has hired independent advisor to oversee the compliance of operation with bank standards but effectiveness of this is questionable since the advisor never met with relevant stakeholders on island.
current status as of 12-Dec-2007
The mine has been in operation since February 2007 after a prolonged shut down due to a operating ban as a result of two spills that lead to fish kills. The mining operation has been repeatedly interrupted by breakdown of equipment, damage caused by typhoon in early 2007 but first shipments have been made.
Since mid 2007
Early October 2007, Lafayette announced a major restructuring and recapitalisation of the project, which essentially is a buy out of the bank lending group by a new 'Special Purpose Vehicle' (SPV) jointly owned by Cornerstone Investors and SEASAF.
Under the preliminary agreement the SPV will buy all outstanding debt, capitalised interest and fees owing by the project to the bank group. This right must be exercised by November 30th by which time total indebtedness is estimated at 269 million US$. The SPV will purchase this for a proposed sum of 123 million US$ (50 percent of face value).
In early December, no agreement has been announced so far. For full details of the deal please see announcement made by
what must happen...
The mine constitutes a threat to both local peoples' livelihood and the islands 'fragile ecosystem. It lacks a social license to operate, as it continues to be widely opposed by the local communities.
The proposed buy out of the bank lending group -which until now has been involved in the project under a 'Equator Principles' arrangement- does not terminate the responsibility of the banks to ensure that social and environmental problems created by the mine and identified by local stakeholders be addressed by the new owners.