Jinchuan starts due diligence on MacroAsia’s Palawan nickel mine

The Jinchuan Group Ltd., China’s largest producer of nickel and cobalt, is conducting due diligence on MacroAsia Corp.’s nickel mine in Brooke’s Point, Palawan.

In a disclosure to the Philippine Stock Exchange, MacroAsia said the Jinchuan Group sent a four-man team of geologists and mining engineers to its mine site in Palawan to do research study for a period of two months.

The due diligence was the offshoot of a meeting between Jinchuan chairman and chief executive officer Li Yong-Jun and tycoon Lucio C. Tan during President Arroyo’s state visit to China in November 2006. Tan owns MacroAsia, which is primarily engaged in aviation-related services.

In that meeting, Tan and Li discussed the possibility of a mutual cooperation between the Jinchuan Group and MacroAsia, a member of the Lucio Tan Group of Companies.

Officials of MacroAsia are currently in China to observe the Jinchuan Group’s operations in what is known as “ Nickel City ” in Gansu Province, northwest China.

The Jinchuan Group accounts for approximately 90 percent of China’s domestic nickel production. It has assets of 18.6 billion RMB ($2.3 billion) and employs 31,000 workers.

MacroAsia obtained the exclusive right to conduct mining operations within the mine site which covers 1,114 hectares of land. Mining operations that are allowed include exploration, development and utilization for commercial purposes of nickel, chromite, iron and other associated mineral deposits that may be found in the area.

MacroAsia’s mineral production sharing agreement has a term not exceeding 25 years from date of issuance and is renewable for another 25 years under the same terms and conditions as the original agreement.

Several mining firms from Canada, China and Japan have approached MacroAsia for a possible joint exploration of its Palawan mine site.

Joint exploration with foreigners is now possible because of a Supreme Court decision in December of 2004 that said foreign investors could control mining operations.

MacroAsia inherited the mining claim over the property, from Cobertson Holdings Corp. – formerly Infanta Mineral & Industrial Corp. It does not own the title to the land but can use it for mining purposes.

Tan took over Cobertson in 1995 to undertake a backdoor listing of MacroAsia. Infanta Mining was the country’s leading nickel mining operator in the 1970s.

The due diligence also came after the Jinchuan Group backed out of talks with Philnico Industrial Corp. on a joint venture to reopen the Nonoc nickel mine in southern Philippines, which has the capacity to produce 41,000 tons of nickel a year.