Philippines Rebels Warn Off Foreign Firms After Raid on Xstrata Mine

Communist rebels in the Philippines have attacked a copper mine controlled by Xstrata and threatened further violence against "foreign capitalists" exploiting the country's natural resources.

According to local reports, up to 40 armed men raided a camp at the Tampakan mine in the southern Philippines, burning six buildings and opening fire on a nearby army encampment. No casualties were reported.

The mine is not due to begin producing for five years, but is one of the largest undeveloped copper resources in south-east Asia. Shares in London-listed Xstrata, which has a 62.5% interest in the mine, closed 1.3% lower yesterday.

The Philippines ended a decades-long ban on mining projects in 2005 but safety fears have dampened the enthusiasm of foreign investors.

In a statement, the New People's Army, the military wing of the Communist Party of the Philippines (CPP), said it would "carry out more and more punitive actions in response to the people's demands to stop the unbridled rapacious and destructive operations of big foreign mining companies".

The US state department, which describes the New People's Army as a terrorist group, reckons the rebel force is 10,000 strong. In April, it attacked a gold project run by Australia's CGA Mining, planting a number of home-made bombs.

The group described the latest raid as "an important milestone in the effort to put a stop to the firm's destructive and plunderous mining operations, defend the ancestral domain of the B'laan tribe; protect the environmental balance and resist the [president Gloria Macapagal] Arroyo regime's campaign to auction off the country's natural resources to big foreign capitalists".

A spokesman for Xstrata said the company remained "absolutely committed" to the project. She said there was already significant security in place. "We have strong government support for the project and strong community support for development in that region. We are committed to developing the mine in a responsible manner, just as we are in any project."

Xstrata, which is based in Zug, Switzerland, increased its estimate for the potential of the mine by 10% to 2.2bn tonnes last month. It is due to complete the feasibility study by the second half of next year. Australia's Indophil Resources owns 32.5% of the project.