GMA seeks restructuring of Philnico’s $300-M debts to draw Chinese capital

President Arroyo has ordered the Department of Finance to work on the possible $300-million debts restructuring of the Philnico Mining Corp. in Surigao del Norte to encourage Chinese companies to push through with their $950-million investment and have the agreement signed during the visit of Chinese President Hu Jintao to the Philippines on April 27.

The President said such project could increase Chinese investments to as much as $200 billion, which could be finalized with the coming of the Chinese delegation.

The President said she is considering a debt restructuring for Philnico, formerly Nonoc Mining, to encourage the Chinese companies to go ahead with their respective investment.

"This (will be) the biggest Chinese investment in the country and we hope . . . let’s pray that this will be successful," Mrs. Arroyo said.

Chinese mining companies are said to be interested in investing in the P1-billion rehabilitation project of Philnico.

Philnico is a nickel processing plant in Nonoc Island, Surigao Cit y which started operation in 1975 but ceased in 1986 due to technical problems.

"What makes Surigao so unique is that it’s one of the richest mining provinces in the Philippines if not in the world. And therefore I came here to look at the very hot prospects for mining here to make sure that they move forward very fast," the President said.

"In terms of the size of the investments, the biggest prospect is the $950-million addition for Nonoc Mining," she said.

With the prospective Chinese investments, the President said the government could already raise the $1 billion needed to make it run.

The President said there would be prospective Chinese investors visiting next week to negotiate the memorandum of understanding for the mining project.

"My purpose here is to find out what can make it successful. And of course the Chinese can recognize the huge nickel deposits here and the problem that we all have to address so that we will make sure they come here is the inherited debt of $300 million," the President said.

Debt restructuring could involve complete or partial debt forgiveness, temporary or permanent debt moratorium, interest rate reduction and term extensions.

The President said this is important as the Chinese investors might find the $300-million debt "too big a burden" upon coming in.

She said Philippine officials would also go to China next week to discuss the possible ways to finally seal an agreement for Philnico.

The President said the Philippines could get up to $200 billion in investments from the Chinese side during the visit not only in mining but also in other projects in Subic, Olongapo and Clark, Pampanga.

"We are preparing our answer to the restructuring problem. It would be smooth sailing from here," the President said.

The President said the Philippine side must be able to convince the Chinese side that it got the political will to address the issue of debt restructuring.