ACMDC corporate secretary Reginaldo Hernandez has informed the Philippine Stock Exchange of the company board’s decision to enter into a memorandum of agreement with Alakor to take over the rehabilitation and re-opening of the Toledo mines in Cebu, although details of the deal were not disclosed.
Aside from pumping in capital for the project, Alakor is also expected to gain majority control of ACMDC to enable it to pursue the Toledo project in full gear.
The new partnership is significant in that it brings together two former business rivals.
It will be recalled that Ramos and the Sorianos were engaged in a bitter intra corporate feud in the late ’80s when Ramos tried to wrest control of ACMDC through a boardroom battle, a move which was vigorously opposed by the Sorianos who then had majority control.
Eventually, the two groups settled their differences and Ramos and his group took their seats in the ACMDC board as minority stockholders.
ACMDC was at one time the fifth largest copper producer 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 labor problems, a heavy debt load and the depressed prices of copper in the international market.
On Nov. 15, 1996, ACMDC forged a tie-up with Minoro Mining and Exploration Corp. in a debt-to-equity deal that granted Minoro the exclusive right to rehabilitate and run the minesite and control 58 percent of ACMDC with the infusion of funds to pay off the company’s debts. The swap also diluted the holdings of the A. Soriano Corp. (Anscor) group to 13 percent.
But last July 7, ACMDC terminated its deal with Minoro, claiming the latter failed on its promise to vigorously pursue the rehabilitation program, thus putting more burden on ACMDC’s capacity to pay off 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.
Aside from the Toledo mine, ACMDC owns a range of strategic assets that include the Berong nickel deposit in Palawan, extensive realty interests, a port facility, a substantial water resource as well as an industrial facility and plant.
ACMDC officials said the decision to terminate the contract was reached "after giving Minoro ample time and leeway to comply with its obligations under the agreement."
"In spite of these concessions, Minoro failed to abide by its commitments, including the commitment to pay for the monthly maintenance of the mines, submission to title to property sufficient to cover the obligations to labor, settlement of obligations to creditors and suppliers of the company," ACMDC added.
The firm said these breach of undertakings exposed ACMDC to various lawsuits lodged by its creditors who had agreed to Minoro’s settlement plan.
Earlier this year, ACMDC 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.
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.
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.