Filipino-owned mining firm Redmont Consolidated Mines Corp. is asking the Securities and Exchange Commission to cancel the business licenses of eight mining companies for violating the maximum 40-percent foreign ownership cap.
In a complaint lodged with the SEC last month, Redmont claimed the eight companies are allegedly being used as dummies by Canadian mining firm MBMI Resources Inc. to get around with the Constitutional limit on foreign ownership in mineral exploration and production.
The eight corporations allegedly posing as Filipino-owned firms are McArthur Mining Inc., Tesoro Mining and Development Inc., Narra Nickel Mining and Development Inc., Sara Marie Mining Inc., Patricia Louise Mining and Development Corp., Madridejos Mining Corp., Betlehem Nickel Corp. and San Juanico Nickel Corp.
“By virtue of the fraudulent scheme of “cascading” and “corporate layering”, a wholly foreign-owned corporation, MBMI, was able to use the purported nationality of its subsidiaries to gain access to the Philippines’ natural resources which has been constitutionally and statutorily reserved to Filipinos,” said Redmont through its law firm Chan Robles and Associates.
In its website, MBMI said it controls more than 60 percent of eight nickel laterite projects in the Philippines covering more than 22,000 hectares in Palawan or more than the 40 percent allowed by law for alien ownership in small mining contracts.
Atty. Lea Marie Picar of Chan Robles and Associates pointed out that the Supreme Court ruling upholding the constitutionality of the 1995 Mining Act only allows 100 percent foreign participation in large-scale mining projects.
She said companies authorized to engage in mining with technical and financial capacity must at least be 60-percent owned by Filipinos.
The law firm also asked the SEC to adopt the “Grandfather Rule” in determining the real nationality of MBMI. Under this rule, the nationalities of shareholders in a corporation are computed to include their mother companies.
“The equity composition of all the respondents at first glance purports to show compliance with the maximum cap for foreign ownership of stocks of 40 percent. But a closer scrutiny and examination would reveal that none of these eight corporations over which MBMI has controlling interests and investments have met the maximum cap for foreign ownership of stocks,’’ said the law firm.
Redmont, which has competing claims over MBMI’s eight mine sites, also claimed that MBMI paid close to 70 percent of the paid-up capital of McArthur, Tesoro, Narra, and Betlehem and 99 percent of the paid-up capital of Madridejos, Patricia Louise, Sara Marie and San Juanico.
Redmont likewise pointed out that as early as December 2007, the Panel of Arbitrators (POA) of the Mines and Geo-Sciences Bureau (MGB) of the Department of Environment and Natural Resources (DENR) Region IV disqualified three of the eight corporations – McArthur Mining, Tesoro Mining and Narra Nickel – for being foreign corporations. Thus, their applications for mineral production sharing agreement (MPSA) and exploration permit application (EPA) were accordingly nullified.