Xstrata preparing to appeal Falcondo ruling

Friday, October 19, 2012

Multinational resource group Xstrata's (LSE: XTA) Falcondo nickel division in the Dominican Republic plans to present an appeal to the constitutional court in the coming week regarding the recent provincial court ruling requiring the company to halt operations and open up access to the resources in the Loma Miranda area of La Vega province, Luis José López, the external affairs manager at Falcondo, told BNamericas.

"We received the formal notice of the ruling and we're currently in the process of drafting all the documents to present our formal objection, which is something that we will do early next week - we'll submit it to the constitutional court," López said on Thursday (Oct 18).

Previously, the company told BNamericas that the decision was unconstitutional and Xstrata would proceed with an appeal arguing violation of the right to property, among other things.

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In the meantime, and despite its objections, the company is making efforts to comply with the court, the spokesperson said.

"We also opened the gates of our property, but no one has entered the property, no one has shown interest in looking at the property, so what we're doing right now is working on the legal side to have all the documents ready," said López, who added that "even though we do not agree and we are appealing what was decided by the court, we are following what the judge ordered since we respect the country's local legal framework."

Loma Miranda, a mountain on the border of Monseñor Nouel and La Vega provinces and near the current Falcondo mine, is the site of a planned expansion project aimed at increasing the life of the company's operations.

The legal action against the expansion project was initiated by an environmental group in a move that is indicative of growing opposition to mining in the country - something that the company previously explained to BNamericas is behind the government's reluctance to issue the environmental permit the project needs to begin operating.

Xstrata restarted operations at Falcondo in February of last year, after suspending production at the nickel mine and refinery in 2008 due to an increase in costs and the drop in ore prices.

According to Xstrata, Falcondo - which has installed capacity of 29,000t/y - produced 13,500t of nickel contained in ferronickel in 2011.

The full interview with Luis José López is published in the latest edition of Mining Perspectives, for subscribers only.