Philnico scraps talks with Jinchuan, seeks new partners

Finance officials said the government would have to look for a new group of investors willing to develop the long-neglected nickel mine of the Philippine Nickel Co.

The Chinese mining conglomerate, Jinchuan Non-ferrous Mining Co., has been in talks with Philnico for the development of the mine but Philnico officials announced yesterday that the company has ended talks with the Chinese group.

Finance Secretary Margarito Teves said the government will now have to look for alternative investors that will take a look at the nickel mine on Nonoc Island in Surigao.

Teves declined to reveal what caused the negotiations to collapse but sources privy to the talks intimated that Philnico had been "particularly adamant" about the terms of the agreement with Jinchuan.

Teves, said there was little that the government could do to compel the parties to return to the table although he admitted that the Department of Environment and Natural Resources (DENR) "had options to consider."

Teves said the terms of the mining agreement with Philnico could be put under review.

Wire news reports quoted Philnico as saying that there were four other groups from China, Russia and Japan that have started their due diligence on the Nonoc mine, opening new possibilities for Philnico.

Up until last month, Teves said that despite the snags and delays blocking the joint venture between Philnico and Jinchuan, the Chinese nickel giant was still intent on putting its investment in Nonoc mines.

Teves said he was in receipt of a letter from Jinchuan expressing its unwavering interest in Nonoc. He said Jinchuan had been intent on the Nonoc mine and has not indicated interest in any other mining venture in the Philippines.

"As far as we know, they are not looking for another partner or any other resource," Teves said. "I don’t know if there are opportunities open to them."

Philnico earlier disclosed that Jinchuan had offered Philnico a 15-percent stake in the proposed joint venture, subject to the conduct of another feasibility study on the project that would be completed in May 2007.

Philnico is 55 percent owned by Hong Kong-based Compline Resources Co., about 30 percent by Australia’s Pacific Energy Ltd. and the rest by local investors.

The company bought the Nonoc mining rights from the government but has yet to settle its arrears estimated at $300 million for the right to develop and extract nickel resources.

Philnico estimated that if the Jinchuan partnership should push through, the earliest Nonoc could reopen would be in 2009. Construction of a new processing facility was estimated to take at least 18 months.

The mine is located on Nonoc Island in Surigao, with a land area of 5,825 hectares. The mine was estimated to have more than 144 million tons of nickel ore reserves.

Nonoc was actively mined from 1975 to 1982, with annual production at 9,600 tons to 25,000 tons of nickel, but it was closed down due to high energy costs.