The government is keen on privatizing and operating its mining assets to boost revenues, according to the Department of Finance (DOF).
The DOF also said efforts are now underway to “untangle” the legal issues surrounding these assets.
The DOF said the Privatization and Management Office (PMO) noted lawsuits filed by the private sector proponents in the operations of these mining assets have hampered efforts by the government to privatize them.
“We are forming an interagency team to study ways on how we can clear the path for these assets to be privatized and revive their operations,” Finance Secretary Carlos G. Dominguez III said.
The interagency team will be composed of representatives from the DOF, Department of Environment and Natural Resources (DENR), the Mines and Geosciences Bureau (MGB), the DOF-attached Privatization and Management Office (PMO), and the Office of the Solicitor General (OSG).
The DOF said a PMO memorandum identified five state-owned mining assets that are under litigation could be privatized and operated.
These assets include the following: the copper-gold project of the Maricalum Mining Corp. (Maricalum Mining) in Negros Occidental; the nickel mines of the Nonoc Mining and Industrial Corp. (Nonoc Mining) in Surigao del Norte; and the gold- and copper-rich North Davao Mining Property (North Davao Mining) in Davao del Norte.
The PMO also said the copper mines of the Basay Mining Corp. (Basay Mining) in Negros Oriental and the nickel mine once operated by the Marinduque Mining and Industrial Corp. (MMIC Bagacay Mine) in Western Samar have also been unoperational because of legal concerns on how these assets should be disposed.
Dominguez recently told business leaders during the 46th Philippine Business Conference and Expo that the government is keen on reviving the mining industry to create alternative employment in the countryside.
“Definitely, we are pushing for the revival of the mining industry,” Dominguez said during the virtual conference.
According to the PMO, DENR Administrative Order (AO) 2012-07, states that the MGB shall formulate the guidelines for the privatization of mines through public bidding.
However, DOF said this needs to be harmonized with the PMO’s mandate to dispose of state assets for a successful tender.
The DOF explained that Maricalum Mining, led by its president, Teodoro G. Bernardino, has been tied up in litigation since 1995. However, the winning bidder, G Holding Inc. (GHI), refused to pay the balance of the price of its purchased shares under its Purchase and Sale Agreement with the government.
The agency said in the last General Information Sheet (GIS) filed by GHI with the Securities and Exchange Commission in 2005, it indicated Michael G. Bernardino as chairman of its board with Eleanore B. Gutierrez as its major stockholder.
Meanwhile, Nonoc Mining was acquired by the Development Bank of the Philippines (DBP) and the Philippine National Bank (PNB) in 1984 and turned over in 1987 to the then-Asset Privatization Trust (APT).
In 1996, APT sold 22.5 million shares of stock of Nonoc Mining to Philnico Mining and Industrial Corp. (PMIC), now Philnico Industrial Corp. (PIC). The sale represented 90-percent ownership of Nonoc Mining.
Based on its 2018 GIS, the PIC board chairman is Ramon S. Ang, and its president is Horacio C. Ramos.
“Under the Arda [Amended and Restated Definitive Agreement] between the two parties, PMIC agreed to pay APT the peso equivalent of $263.762 million as purchase price, payable in two sets of installments and in accordance with the schedule set in the ARDA,” DOF said.
It explained that the government moved for the reversion of the shares sold to PMIC when the latter defaulted. This led to numerous cases filed by both the private sector and the government against each other that eventually reached the Supreme Court.
The DOF said the issue is now awaiting resolution by the high court. To date, there has been no collection on the P14.9 billion purchase price.
Meanwhile, the North Davao Mining case involved the bidding for a Joint Operating Agreement (JOA) to develop its mining assets in partnership with the Philippine Mining Development Corp. (PMDC).
The PMDC is a wholly-owned and controlled-government corporation designated as the new implementing arm of the DENR in undertaking the mining and mineral processing operations in Compostela Valley Province, among others.
“The Asia-Alliance Mining Resources Corp. [AAMRC], led by its President Simon L. Paz, was qualified and considered as the highest calculated and responsive bid, failed to comply with the conditions of the Notice of Award in 2009, including failure to pay the commitment fee, secure a performance bond, and execute the JOA. A series of litigation ensued, and is still pending with the Court of Appeals [CA],” DOF said.
The agency said that in terms of Basay Mining, formerly the CDCP Mining Corp. which was established in 1970, its operations were suspended in 1983 because of lack of working and operating funds.
The Basay Mining had entered into a Deed of Assignment of Mining Claims and Leasehold Rights with the Philippine National Bank (PNB) to secure credit and loan accommodations from PNB.
DOF said technical studies by the PMO indicated that the Basay mine is estimated to contain at least 105 million tons of copper ore and could generate at least P1 billion.
Similarly, MMIC Bagacay mine which has been mired in environmental complaints and was foreclosed by the DBP and PNB in 1984 with an outstanding claim of P19.5 billion. Its assets were transferred to APT for privatization.