GMA orders restructuring of Philnico’s $300-M debt

President Arroyo has ordered the Department of Finance (DoF) to fasttrack the restructuring of the $300 million debt of the mothballed Philnico Mining Corp. in Surigao City to encourage large Chinese companies to push through with their plans of investing $1 billion in a nickel processing plant this year.

In a press conference in Surigao City the other day, the President said she has given the DoF a week to finalize the debt restructuring since a government team would be going to China on April 15 to try to forge a memorandum of understanding with interested Chinese mining firms to operate Philnico.

"The Chinese recognize the huge nickel deposits here but the problem is that we have to address its inherited debt of $300 million to make sure they (Chinese investors) come here," Mrs. Arroyo said. "We hope this will be one of the highlights of the agreement that will be signed when (Chinese) President Hu Jintao and I meet in Manila on April 27."

She said the $1-billion potential investment covers only 10 percent of Surigao’s nickel resources "so this is going to be a rich province so let’s all work together to make this investment a reality."

Philnico, formerly Nonoc Mining and Industrial Corp., is a nickel processing plant on Nonoc Island, Surigao City, which started operation in 1975 but was forced to cease operation in 1986 because of technical difficulties.

Trade and Industry Secretary Cesar Purisima said Chinese firms Jinchuan Nonferrous Metals Corp. and Shanghai Baosteel Group Corp. are currently under negotiations with Philnico for the latter’s much anticipated rehabilitation program.

If the Philnico rehabilitation project is completed, the company will generate around $350 million in nickel exports annually. This would also lead to the direct and indirect employment of 4,500 workers.

Jinchuan is the largest mine and refinery company in China producing nickel, copper and platinum metals while Shanghai Baosteel is among the largest steel companies worldwide, Environment Secretary Michael Defensor said.

The President said there are four potential big ticket mining projects, including the revival of Philnico, in Surigao province alone that could generate at least $2 billion in investments.

Defensor gave assurances that the environment would be protected despite the influx of investments in mining because of stricter policies from the government. — With Ben Serrano