By Manolo Serapio Jr and Enrico Dela Cruz

MANILA (Reuters) - The Philippines' environment minister stepped up a crackdown on mining on Tuesday, cancelling almost a third of the country's contracts for undeveloped mines and rejecting any challenges to earlier orders to shut over half of all operating pits.

The move turns up the heat in her battle with the mining sector after she ordered the closure of 23 of the country's 41 mines earlier this month on environmental grounds, causing an outcry from the industry and threats of legal action.

The latest 75 contracts, which cover projects in the exploration stage or otherwise not yet in production, are all in watershed zones and would threaten water supply if they went ahead, Environment and Natural Resources Secretary Regina Lopez said.

"You kill the watershed, you kill life," Lopez told a media briefing.

A long-time environmentalist, Lopez ordered the closure of the 23 mines on Feb. 2 for damaging watersheds and for siltation of coastal waters and farmlands. Five more mines were suspended. The industry says the orders will affect 1.2 million people.

The contracts cancelled on Tuesday, known as mineral production sharing agreements (MPSAs), include the $1.2 billion copper-gold project of Philex Mining Corp (PX.PS), one of the country's biggest miners, in southern Philippines.

Also scrapped was the permit for the $5.9 billion Tampakan copper-gold project in South Cotabato province in Mindanao island, the biggest stalled mining venture in the Southeast Asian country.

Tampakan failed to take off after the province where it is located banned open-pit mining in 2010, prompting commodities giant Glencore Plc (GLEN.L) to quit the project in 2015.

"We're cancelling this as a gift of love to the people of Cotabato," Lopez said.

There are currently 311 MPSAs including those for the 41 operating mines, government data showed.

Lopez also disputed the ability of the country's courts to halt her closure orders as affected miners prepare to take legal action.

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"There is no TRO (temporary restraining order) that holds function in the case of environment enforcement," she said.





'ABSURD', SAYS INDUSTRY

Lawyer Ronald Recidoro from the Chamber of Mines of the Philippines said Lopez's latest action was "absurd" and ignored due process given MPSAs were contracts between the government and the companies.

"You cannot just unilaterally cancel contracts, especially if there are no specific grounds," Recidoro told Reuters.

Mining law allowed operations in watersheds, he added, except those declared protected by the government.

But Lopez said it was within her discretion "to decide on the resources of the country."

Top Philippine nickel ore producer Nickel Asia Corp (NIKL.PS) said on Tuesday it would pursue all legal remedies to overturn an order to close the operations of its unit Hinatuan Mining Corp.

Hinatuan was told that its operation has "impaired the functions of the watershed in the area," according to a copy of the closure order.

The decision to close or suspend existing mine operations followed a months-long audit of the mines, although a government team that reviewed the audit recommended only suspensions and fines.

President Rodrigo Duterte on Sunday said he would not stand in the way of Lopez's decision to shut several mines in southern Philippines, the second time he has thrown his support behind the minister he appointed last June.

If Duterte upholds Lopez's actions, Recidoro said affected miners could seek relief with the Court of Appeals and "then the Supreme Court."





(Reporting by Enrico dela Cruz and Manolo Serapio Jr.; Editing by Richard Pullin)