Possible Tampakan stake strategic for DMCI — analysts

By Adrian H. Halili, Reporter

THE CONSUNJI family’s plan to inject its 10% stake in the Tampakan copper and gold project into DMCI Holdings, Inc.’s portfolio is seen as a strategic move to diversify the listed firm’s mining assets and reduce reliance on nickel, with the potential to enhance financial stability and asset value once the project becomes operational, according to analysts.

“If DMCI were to acquire this stake, it could diversify its mining assets, adding substantial value to its portfolio by entering the copper-gold market,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message on Wednesday.

He added that this diversification could also support the company’s financial stability.

The Tampakan project in South Cotabato is recognized as one of the largest untapped copper and gold reserves in Southeast Asia, with an estimated 15 million tons of copper and 17.6 million ounces of gold. The project spans 25,371 hectares. The development of the project was stalled due to the national ban on open pit mining in 2017.

The 10% stake is privately owned by the Consunji family’s Dacon Corp. The Tampakan project is operated by Sagittarius Mines, Inc. (SMI), a joint venture that includes global mining companies and local partners, operating under a financial and technical assistance agreement with the Philippine government.

Last year, SMI said that it was still on track to start operations of the gold and copper project by 2026.

“Their (DMCI Holdings’) current mines all produce nickel, which is currently facing oversupply due to surging output in Indonesia, so prices are quite low,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message.

According to the Mines and Geosciences Bureau, the average price of nickel ore fell 23.7% to $7.94 per pound in the first half of the year from $10.4 per pound a year earlier. Indonesia is among the top producers of Nickel in the world.

“Note that Tampakan is still far from operational, and they only hold a small 10% stake so the effect may not be immediately felt or significant,” AP Securities’ Mr. Garcia said.

Mr. Arce said that this could reduce the company’s dependency on a single mineral type and provides a buffer against price volatility.

“By adding a copper-gold project, the company would be diversifying its asset base beyond these metals, spreading its exposure across multiple commodities,” he said.

Nickel and copper are among the minerals critical for producing renewable energy products and electric vehicles.

“Gold is traditionally seen as a safe-haven asset, especially during times of economic uncertainty,” Mr. Arce also said.

Gold prices have increased during the first semester where it was seen averaging at $2,203.50 per troy ounce, up 13.9% from $1,933.95 per troy ounce a year ago. Copper prices went up to $4.02 per pound from $3.95 per pound.

Earlier, DMCI Chairman and President Isidro A. Consunji said that the company was looking to expand its mining business with new gold, copper, and coal assets.

The company operates nickel mining projects in Zambales and Palawan via its unit DMCI Mining Corp. It operates open-pit mines through Berong Nickel Corp. and Zambales Diversified Metals Corp.

In a regulatory filing on Tuesday, DMCI said that the potential injection of the 10% stake in the Tampakan project has not yet been discussed with the company’s board of directors.

It added that there is no definitive agreement concerning the transaction.

For the second quarter, DMCI Holdings’ net income declined by 32% to P5.5 billion from P8.1 billion the same period in 2023. This was attributed to the weaker performance of its energy, real estate, and mining segments.