$1-B investment of 2 Chinese firms in Philnico to be delayed further

The finalization of the $1-billion investment of Jinchuan Nonferrous Metals Corp. and Shanghai Baosteel Group Corp. in Philnico Mining Corp. (formerly Nonoc Mining and Industrial Corp.) continues to be delayed over the restructuring of Philnico’s $300 million obligation to the National Government and China’s dismay over criticism of its funding of the Northrail project.

According to industry sources, the Chinese investors have perceptibly slowed down and perhaps lost some of their enthusiasm in investing in various Philippine projects, including Philnico, due to opposition criticism over the Chinese-funded Northrail project.

Finalization of the Chinese investment in Philnico was suppose to have been completed last month but the Chinese representatives of Jinchuan and Shanghai Boasteel have rescheduled the talks either at the end of this month or early in December.

Philnico officials and the Chinese investors are still trying to complete the deal, according to Evaristo Narvaez Jr., president of Philnico.

In fact, Narvaez said, the Chinese investors are continuing with their due diligence, sending at least three various teams since April to conduct the due diligence.

Narvaez admitted that under the letter of intent (LOI) that Philnico and the Chinese investors signed, the investment was supposed to have been concluded by October this year.

Unfortunately, Narvaez confirmed, Philnico is still in the midst of talks with the Privatization Management Office and the Privatization Council over the restructuring of Philnico’s $300 million debt to the government.

Narvaez refused to discuss the possible restructuring terms, merely assuring that a restructuring may be granted by government before the end of the year.

Philnico, Narvaez said, may thus ask the Chinese investors to give it additional time to settle the debt issue.

However, Narvaez denied any perception that the Chinese investors are losing interest in investing in Philnico even though there have been increasing talks that the Chinese government is miffed with the continuing criticism over the Northrail project.

Narvaez insisted that the continuing due diligence by the Chinese investors "is clear evidence that they are still interested."

"They have not formally said anything to me," Narvaez said, thus boosting his confidence that negotiations for the investment is still on track.

Additionally, Narvaez said, the fact that the Chinese investors have set a date to meet either at the end of this month or early in December is a further indication of their interest.

The scheduled meeting, Narvaez said, could set a clearer picture to the planned investment.

Even aside from China’s resentment over the Northrail project, industry sources said, the government has not been ale to resolve the debt problem of Philnico which the Chinese investors want cleared up before it finalizes an agreement to invest in the nickel mining firm located in Nonoc Island in Surigao.

Philnico started operation in 1975 as the Marinduque Mining and Industrial Corp. (MMIC) owned by the Cabarrus Family.

By 1986, however, MMIC had to stop operations due to technical and financial difficulties stemming from its inefficient and costly ammonia process leaching (APL) system.