DENR urged to scrutinize mining firm's operations

Manila, Philippines - The finance department has urged the Department of Environment and Natural Resources (DENR) to intensify the drive to preserve Philippine resources, asking it to look into the operations of Philnico Industrial Corp. (PIC) which has been conducting mining activities in a mineral reservation in Surigao.

In a letter to Environment Secretary Ramon Paje dated May 16, Finance Secretary Cesar Purisima said PIC has paid only $1.25 million of the $263.8 million owed to the government since 1996 for the purchase of the state’s interest in Nonoc Mining Industrial Corp. (Nonoc), which had the mining rights in the Surigao mineral reservation.

The purchase was made under the terms of an Amended and Restated Definitive Agreement (ARDA) executed in 1996 by the PIC, Nonoc and the government through the Asset Privatization Trust (now Privatization Management Office or PMO).

The ARDA was executed after the PIC defaulted in its previous agreement with the government and the original mineral production sharing agreement was revoked by the government. 

The company, having said that it had entered into a deal with a “financially able partner,” then sought and was allowed renegotiation through an amended agreement.

Under the amended deal, however, Purisima said PIC still had not settled its obligations to the government, stressing that its $1.25-million payment was only “less than one percent” of the total amount it had to pay.

“With PIC’s failure to meet amortization payments, PMO demanded that PIC comply with its obligations under the ARDA or it will be constrained to exercise its remedies under the ARDA,” the letter stated.

“Instead of complying with PMO’s demands, PIC filed a complaint against the PMO to prevent it from exercising its available remedies in the ARDA. The case was filed on Feb. 2, 2003,” it further said.

“Despite the lapse of eight years, there is no indication as to when the case will be decided by the courts. In the meantime, PMO is deprived of its remedies under the ARDA while PIC is able to continue mining the project area through subcontractors,” it added.

Purisima said there were reports that Hinatuan Mining Corp., Philnico’s subcontractor, “as well as other entities have been continuously conducting mining operations and shipping nickel ore from the project area.”

“The PMO has been forced to expend considerable resources in order to defend and vindicate the rights and interest of the Republic. These efforts will however be all for naught if PIC or its subcontractors are allowed to continuously deplete the mineral resources while at the same time tying up the matter in court,” the letter explained.

“As the government agency with the mandate to protect the Republic’s interest over the environment and its natural resources, we urge the DENR to take the necessary action/s against PIC’s continued exploitation of the project area,” it added.