Philnico agrees to pay initial $45M for Nonoc

Philippine Nickel Co. (Philnico) has agreed to pay an initial $45 million for the Nonoc nickel mine, a move that would bring the Chinese mining giant, Jinchuan Non-Ferrous Metals Corp. (Jinchuan) closer to its $1-billion investment in the country.

Sources privy to ongoing negotiations disclosed that the $45-million bond would be in partial payment for the $300 million that Philnico still owed the government for the Nonoc mine.

According to the source, the funds are most likely to come from Jinchuan since Philnico has made only a token payment to the government since it acquired the mine.

Jinchuan and Philnico had already signed a memorandum of understanding with the National Government but the source said there were specific terms of the final agreement that needed to be threshed out.

"It will all be covered in the financial and technical assistance agreement or FTAA which would lead to the recovery of some value for the government," the source said.

The source said the entire package has not been finalized and this would determine what extent of participation the government would have in the project.

When completed, Jinchuan’s entry into the nickel venture would be the first major investment since the Supreme Court issued the ruling that allowed foreign entities to own interests in mining resources in the country.

Jinchuan’s investment is expected to strengthen further trade and economic between China and the Philippines.

According to the source, the National Government was less interested how Jinchuan intended to come into the mining venture than it was in getting paid back the amount that Philnico owned.

"It’s basically a private venture and it will be up to the private parties how to make it work, the government just wants to get paid," the source said.

Jinchuan’s interest in Nonoc mine pushed the government and Philnico to enter into an out-of-court settlement after years of legal deadlock in the local courts.

Finance Secretary Margarito B. Teves said earlier that aside from being paid some amount in cash, the government also opted to own equity in the Nonoc nickel mine.