DOF, Philnico still at odds over unpaid taxes, royalties

MANILA, Philippines - The Department of Finance (DOF) and Pacific Nickel Philippines continue to be at loggerheads over the issue of unpaid taxes, royalties and fees.

Pacific Nickel Phils. claimed that it had already paid its obligation for its purchase of the government’s stake in Nonoc Mining Industrial Corp.

The DOF, on the other hand, said in a statement Pacific Nickel, a subsidiary of Philnico Industrial Corp. (Philnico), has not yet fully settled the $263.8 million due to the Asset Privatization Trust which is now the Privatization Management Office) under the Amended and Restated Definitive Agreement (ARDA) signed in 1996.

“The P277.6 million it (Philnico) reportedly paid in the form of taxes, royalties and fees represent taxes and royalties from its continued mining operations, and is separate from the purchase value of the state’s interest in Nonoc Minining Industrial Corp. under the agreement,” it said, adding that Philnico’s own statement, in effect, was an admission that it only paid $1.25 million of the US$263.8 million it owed to the government.

Pacific Nickel has claimed that it has already paid the government an additional $200 million which the Finance department immediately refuted.

This as the DOF said the amount pertains to the original book value of the old ammonia leach nickel refinery back in 1970s, and which has now been essentially abandoned by Pacific Nickel.

By the company’s own admission the old refinery is obsolete and needs to be replaced by a more modern high pressure acid leach (HPAL) refinery, it said. The original refinery was supposed to be used by Marinduque Mining (Nonoc Mining’s predecessor) in order to refine the low-grade nickel ore from the mining site in Surigao.

As to the reported “limited” operations Philnico is conducting in Surigao, the DOF statement said that documents from the Department of Environment and Natural Resources (DENR) showed that Hinatuan Mining Corp., a subsidiary of Nickel Asia, shipped at least 856,000 wet metric tons from 2003 to 2008.

This, the DOF said, shows that Philnico’s operations in Surigao are not really limited as it has claimed.