Atlas Mining enters into deal with Chinese firm

Atlas Consolidated Mining and Development Corp. (ACMDC), once the biggest copper producer in Southeast Asia, has signed a deal with China Nonferrous (CNF), a state controlled mining firm of the People's Republic of China, for various joint venture projects that include a $2-billion copper purchase arrangement.

In a statement to the Philippine Stock Exchange, ACMDC said a memorandum of understanding (MOU) was signed last Friday between the two parties in Beijing during a state visit by Vice President Gloria Macapagal-Arroyo.

Aside from the possibility of a long-term (up to 20 years) copper concentrate purchase deal, CNF expressed its readiness to extend preferential loans and equipment supply for the reopening of the Toledo copper mine in Cebu.

The Toledo mine was once the fifth largest copper mine in the world and has a track record of 39 years of continuous copper operations prior to its closure in 1994, producing some 5.6 billion pounds of copper, ACMDC was forced to suspend its operations due to the depressed prices of copper in the international market compounded by labor problems.

The company said copper prices have now recovered sufficiently to warrant the reopening of the Toledo mine, with a targeted initial production rate of 110 million pounds. Since China represents a large market for copper concentrates, its tie-up with CNF is seen to directly benefit ACMDC.

While CNF also operates mines in Iran, Mongolia and Zambia. It is also a major importer of metal concentrates for smelting and refining in the mainland. CNF likewise engages in general engineering and construction on an international basis.

In addition to the purchase, CNF is also investigating the viability of establishing a metal processing industrial and export zone in Toledo. Further discussions on establishing an engineering and construction joint venture on an international basis with ACMDC Ventures, ACMDC's construction subsidiary, is also being pursued.

CNF has also expressed strong interest in participating in the large high-grade nickel laterite deposit in Berong, Palawan as well as a joint venture with ACMDC's various projects in Papua New Guinea.

As in the worldwide technology trend, both parties are in the process of linking up their businesses through an e-commerce facility, which will be structured to include the use of the Entrade Asia Pacific transactional technology and software platform.

This Internet portal will handle countertrade and offsets, equipment, asset inventory management and disposition trading of concentrates and forest products.

Last year, ACMDC had written off P1.83 billion in loans through a debt-to-equity swap with Minoro Mining and Exploration Corp. to pave the way for the eventual clearing of the former's P2.059-billion debt load.

ACMDC said it has forged an agreement with Minoro and Japan's Mitsubishi Materials Corp. to absorb the P1.83-billion debt. This is in addition to Minoro's previous settlement of P7.3 million from 34 Atlas creditors.

Minoro, a Filipino company headed by experienced British-Australian mining engineer Frank Lubbock, sold its substantial holdings in the UK-listed Philippine Gold plc., the owners of the Masbate, Benguet, Paracale and Banahaw gold mines as well as other significant quality gold projects in the Philippines to buy into ACMDC.

Since it entered into a debt for equity deal with ACMDC in late 1996, Minoro has infused some P400 million and has carried out a bankable feasibility study to international standards on the Toledo copper mine with positive conclusions and a declared intention to reopen the mine within 18 months.

Once completed, the debt-to-equity swap will retire ACMDC's additional creditors and leave it relatively debt-free, hence securing its historic asset base intact.

ACMDC owns a range of strategic assets including the Toledo mine, the Berong nickel deposit in Palawan, extensive realty interests, a port facility, a substantial water resource as well as an industrial facility and plant.