Jinchuan sweetens offer for Nonoc mine

BY REAGAN D. TAN, BusinessWorld Reporter China’s largest nickel producer Jinchuan Nonferrous Metals Corp., has made a "better" offer for the mothballed Nonoc nickel mine in Surigao del Norte and has called for resumptions of stalled negotiations with mine owner Philippine Nickel Corp. (Philnico) for a joint venture agreement, a government official said. Trade Secretary Peter B. Favila said he received last week a letter from Jinchuan Chairman Li Yong-Jun containing "refinements" to the firm’s earlier offer to infuse $1 billion for reviving the Nonoc mine, one of the richest nickel deposits in the world. "Philnico is asking for a better price. But [the price] is between the two parties [to agree upon]. But let’s put it this way, it is an improvement from their earlier offer," Mr. Favila said this week, declining to provide figures. But Philnico appeared uninterested, with Chairman Evaristo M. Narvaez, Jr. saying that the firm is already in "advanced stages" of negotiations with other firms. Mr. Narvaez also said he was not aware of Jinchuan’s renewed interest in the mining project and that he was not informed of the letter Jinchuan sent to Mr. Favila. "I can’t commit on that [Jinchuan’s new offer]... We cannot just terminate other negotiations with other firms," Mr. Narvaez told BusinessWorld without revealing its potential partners. "Jinchuan has written us a letter [earlier this year] terminating our negotiations. As far as we are concerned, we haven’t talked to them since that time," he added. Jinchuan and its shareholder the Baosteel Group, China’s biggest steel firm, had earlier agreed to invest $1 billion in reviving the Nonoc complex, which had capacity to produce 41,000 tons of nickel annually. The two Chinese firms had also agreed to settle Philnico’s $300-million liability, which was accrued when the local firm bought the Nonoc mine from the government in the mid-1990s. But joint-venture talks ended in January after Jinchuan sought to do a feasibility study separate from a study already done by Philnico. Mr. Narvaez said that negotiations with the other firms are on track and that the mine would be reopened by 2008 and fully operational by 2010. The Nonoc mine operated from 1975 but closed down in 1982 due to high oil prices and energy costs. It is one of 24 priority mining sites of the government that would bring in a total of $6.5 billion worth of investments and create over 200,000 jobs in the medium term. Government data show that Nonoc island has about 144 million tons of nickel ore reserves. Mr. Favila said that Jinchuan made the new offer because "there’s value in the investment."