MAC: Mines and Communities

Nickel mining firm barred in Davao Oriental

Published by MAC on 2008-05-26

Sun Star Davao

DAVAO CITY, Philippines - A Makati Regional Trial Court (RTC) has issued a writ of preliminary injunction against foreign-owned mining firm BHP Billiton, barring the company from operating in the Pujada Nickel mining site in the City of Mati, Davao Oriental. In an Omnibus Order dated May 20, 2008, Judge Winlove Dumayas of the Makati RTC Branch 59 ordered BHP Billiton against "using, occupying, exploring, developing and exercising acts of ownership of mining right over the Pujada Properties."

The court also prevented BHP Billiton from "unlawfully misrepresenting that the joint venture agreement, which has already been rescinded, still subsists."

It was learned that BHP Billiton entered into a joint venture agreement with the Filipino-owned Asiaticus Management Corporation (Amcor) in 2002 to mine Amcor's Pujada Properties located in the nickel rich mountains of Macambol in the City of Mati.

On July 25, 2007, Amcor decided to rescind its contract with BHP Billiton due to the latter's alleged failure to comply with their reciprocal obligations stated in their joint venture agreement.

Amcor then filed a case before the Makati court on August 22 for damages and injunction. This was followed by an Urgent Motion on October 1 with Amcor, claiming that BHP Billiton "have committed and are still continuously threatening to commit and violate Amcor's rights over the Pujada Properties."

Among the violations alleged against BHP Billiton are the continued presence of its employees and officials within the 11,799-hectare property owned by Amcor. The foreign-owned mining corporation was also accused by the indigenous people living in the area of constructing fences in their occupied lots. As claimed by the Ips, the fences limited their passage to the mountains where they hunt for their food.

BHP Billiton meantime filed a "motion to dismiss" the complaint filed by Amcor on the following grounds:

* Summons were not validly served on the defendants (officials of BHP Billiton);

* The complaint failed to state a cause of action;

* Amcor failed to comply with a condition precedent for the filing of the complaint, which is the arbitration clause contained in the Shareholders Agreements of the two parties;

* The complaint failed to state a cause of action for rescission (of the joint venture agreement);

Amcor violated the rules on forum shopping since they allegedly sought the same relief with the Department of Environment and Natural Resources (DENR) based on the same allegations and principal issues stated in the complaint.

In the court decision, the motion to dismiss by BHP Billiton was denied, saying the summons were served validly, thus the court has acquired jurisdiction over the BHP Billiton officials accused. The court added that with the complaint filed, it would be best for the truth to be determined by the court in a trial.

On the issue on forum shopping, the court declared that the letter to DENR Secretary Lito Atienza dated April 1, 2008 requesting that the Mineral Production Sharing Agreements (MPSA) acquired by BHP Billiton be returned to the seven original holders -- Galactica Mining and Development Corporation, Mt. Peak Mining and Development Corporation, Oregon Mining and Development Corporation, Hopewell Mining Corporation, P.L. Goldman Mining and Development Corporation, Blue Ridge Minerals and Development Corporation, and St. Patrick Mining and Development Corporation; is not a form of forum-shopping since the request or cause of action filed before the Makati RTC and the DENR involve different causes of action, issues and relief.

Mining in Pujada started in 1969-71. The seven original holders of the MPSA's in the area later sold their rights to Amcor. BHP Billiton meanwhile partnered with QNI Philippines that made the joint venture agreement with Amcor over Pujada mining project in 2002.

The Pujada Nickel Mining project is dubbed as one of the biggest mining projects of the Arroyo administration and is expected to bring in more than $1.5 billion in investment for the country.

Amcor, however, decided to rescind its agreement with BHP Billiton after Amcor claimed to have discovered the real plan of BHP Billiton for Pujada, which is to mine its nickel only in 2019 contrary to their agreement to start mining operation by 2010.

Amcor Vice President Ruben Tan, in its letter to Atienza, also alleged that BHP Billiton is really planning to have the Pujada nickel as their "reserve for some future development date or mine speculators who want to have mines to produce in the future," which is more known as mine banking.

Tan said the Philippine is in dire need of investments and jobs "now and not later." This, he said, is the main reason why Amcor decided to rescind its contract with BHP Billiton.

Amcor vowed to start operation in Pujada by 2010. The operation is expected to give jobs to the community and revenue to the local and national governments.

Australian miner accused of breaching investment promise for nickel project

Business World ,Vol. XXI

15th May 2008

DAVAO CITY - A local mining firm wants its joint venture deal with an Australian miner nullified for the latter's alleged failure to deliver on its investment promise.

In a letter to the Environment department, Asiaticus Management Corp. said the Australia-headquartered BHP Billiton Ltd. has failed to put up its $1.5-billion investment in a nickel project and is nine years behind production.

Asiaticus Vice-President Ruben C. Tan noted that under its join venture deal the Australian miner signed in 2002, the latter was supposed to set up a $1.5-billion smelting plant in this city.

"A lot of words, a bag of hot air in action," he told Environment Secretary Joselito L. Atienza in a letter dated April 4, noting that BHP Billiton had promised President Gloria Macapagal-Arroyo to start nickel production by 2010. But based on data from the Australian-British firm, the earliest it could start production is in 2019, Asiaticus said.

BHP Billiton is the world's largest mining company. It was created in 2001 by the merger of Australia's Broken Hill Proprietary Company (BHP) and the Britain's Billiton, which had a South African background. The result is a dual-listed company.

The Australian BHP Billiton Ltd. and the British BHP Billiton Plc. list separately, with separate shareholder bodies, but they operate as one business with identical boards of directors and a single management structure. The headquarters is in Melbourne.

"This is not the type of investor the country needs to help it [earn] dollars and jobs for the local community," Mr. Tan said.

BusinessWorld tried to contact Benhur Catbagan, BHP Billiton community relations superintendent, but he neither returned calls nor answered text messages. Edilberto L. Arreza, regional mining director, was also unavailable for comment.

It was learned that in December, a Makati regional trial court issued restrained BHP Billiton, through its local subsidiary QNI Philippines Inc., from going to the 11,800-hectare site.

The court was acting on a complaint filed by Asiaticus to have its deal with the foreign miner rescinded.

"We seriously ask, what if by 2019 nickel prices drop? What if nickel substitutes emerge? Who will miss the opportunity to earn? Who will bear the suffering? It will be the country, the local community and their dependents," Mr. Tan said in his letter to the Environment chief.

He added that if the contract is rescinded, his company would immediately start drilling programs to "meet its objective to ship out nickel laterite ore within a year."

Starting the project as soon as possible would ensure that the local community would benefit from the project through jobs and revenues for the local government, he added.

Mr. Tan said Asiaticus had signed a memorandum of understanding with BHP Billiton in Australia in 2000 and entered into a joint venture two years later in Singapore .

On April 11, the Mandaya Tribal Council of Macambol, Mati City, one of the areas covered by the mining project, passed a resolution opposing the entry of BHP Billiton. The council wants Asiaticus to start mining the site without its Australian partner.

In February last year, Environment officials met with Chris Campbell, BHP's chief development official for stainless steel materials, and Philip Hopkins, group manager for regional development.

The government said BHP Billiton would tap nickel reserves at the Pujada Peninsula in Davao Oriental. The Davao mine area, covering close to 12,000 hectares, is estimated to have 150 million metric tons of nickel grade ore.

BHP Billiton was said to be upbeat on the developments of their project and brought up the possibility of building their own nickel processing plant here should the volume of the deposit prove big enough.

The government earlier said BHP Billiton was also in talks with local mining firm Benguet Corp. for a possible joint venture project in Benguet's nickel mining claim in Zambales Province, north of Manila . Philippine nickel production surged to 50,637 metric tons in 2006 from only 16,972 metric tons in 2004. - CQF

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