First Metro Asset Management Inc

Atlas shrugged while the birds flew – Gus Cosio

8:30am  Monday  12 March 2012

Last Friday, we – a group of fund managers from Manila, Hong Kong and Singapore – spent the day being toured around the Carmen Copper Mine of Atlas Consolidated Mining Corporation (AT) in an observation trip sponsored by MacQuarie Philippines.  When I first started to look for work in the mid-70′s, Atlas Consolidated was one of the more desirable companies to work for.  It was consistently within the top 5 corporations of the Philippines and was the owner of reputedly the third largest copper minee in the world, the largest in Asia.

I never got to work for the mining industry, but there was a sense of fulfillment in me to have gone to a place that I had read so much about many years ago.  Moreover, the information and insight that one gets in visiting a mining project with the magnitude of the Carmen mine is something that you could not get by just reading a research report.

A mining operation is undoubtedly an enormous and expensive undertaking.  It affects so many lives, and in the case of Atlas, you could see the thousands of people whose livelihood depends on the profitable operations of the company.  From the observation decks of the Lutopan and the Carmen pits, all you need to do is count the number of gargantuan dump trucks capable of hauling 100 tons of ore, backhoes and pay-loaders that move around like ants from the distance.  The same level of activity can be seen on the mining roads where traffic controllers ensure the safe movement of these gigantic vehicles from the mine pit to the crushing bins where the rocks are crushed and the smaller pieces go into a conveyor.  These smaller pieces are then moved by the conveyor to the ball mill where the copper concentrate is eventually recovered together with by products – magnetite and pyrite.  What I found most revealing was the fact that the process was carried without any chemical process.  Everything was physical, therefore no toxic element was ever released into the surroundings.  The only outside element introduced in the process was water which was recycled over and over again.  It was amazing.

The hills surrounding of the mine pits, as well as the old mined over portions, were lush with forest cover.  According to mine personnel, fauna such as snakes and small mammals were abundant.  Hundreds of birds flew around the crushing area.  There were seedling nurseries which raised trees for replanting in the mining property.  The area was several times more lush and forested than the provinces surrounding Metro Manila.  It really escapes my understanding how environmentalists could claim that all mining companies do not care for the environment.  Urban dwellers definitely care less if you compare their behavior to these miners.

The extent that mining companies go through to extract the ore was awesome to say the least.  The proportions were astounding considering that from 100 tons of rock, you only get 2 tons of concentrated copper.  Incidentally, after further processing, a small amount of gold will still be axtracted from the concentrate.  This is the reason why a credible mining company has to raise a huge amount of capital to carry out a reputable mining operation.  The capital is used both for extracting the mineral and later to restore landscape and improve the vegetation.

I have been an optimist in as far as the local mining industry is concerned.  I believe that a great amount of prosperity in the economy can be created by mining if done responsibly.  Fortunately, these serious mining companies in the Philippines come to the market to raise capital and give the investing public an opportunity to participate in the prosperity that a mining project can bring.   I think mining stocks still present the best opportunities for growth in the Philippine stock market.

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First Metro Asset Management Inc