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Monday January 29, 11:34 AMManila's Philnico stops nickel talks with JinchuanMANILA, Jan 29 (Reuters) - The Philippines' Philnico Industrial Corp said talks with China's Jinchuan Group Ltd. on a joint venture to reopen the Nonoc nickel mine had hit a snag and the firm was talking with four other investor groups.Philnico Chairman Evaristo Narvaez told Reuters the company has ended talks with Jinchuan after the Chinese group indicated it wanted to do a feasibility study on the project, a move that could further delay the re-opening of a mine that has been closed since 1982. Narvaez said four other groups from China, Russia and Japan have started their due diligence on the Nonoc mine in the southern Philippines, which has the capacity to produce 41,000 tonnes of nickel a year, equivalent to about 3 percent of world demand. "We have stopped talking with them," Narvaez said. "Let them do their feasibility study if they want to but we will not deal with them exclusively." "We cannot afford another delay," he said. Failure to get a deal comes despite sky-high nickel prices. The metal hit a record $38,950 a tonne on Friday on tight global supply. "We want them to compete in terms of price, timing, and other commercial terms and conditions," he said. "We want to conclude it as fast as possible." State-owned Jinchuan and the Baosteel Group, China's biggest steel firm, agreed in April 2005 to invest $1 billion to revive the Nonoc mine, part of the Philippines' plan to revive its once lucrative minerals sector and boost economic growth. Since then, the Chinese group had finished due diligence on the project. In July, it signed a debt accord with the Philippine government and Philnico, which needs to settle some $300 million of debts stemming from the mid-1990s when it bought the mine from the government. Last month, Narvaez said the Chinese group offered Philnico a 15-percent stake in the planned joint venture, subject to the conduct of another feasibility study that would be completed in May. Foreigners can now own up to 100 percent of mining firms from 40 percent previously under the Mining Act upheld by the Supreme Court in late 2004. Narvaez had said if a deal was clinched this year, the earliest the Nonoc mine could reopen would be in 2009 as construction of a new facility would take at least 18 months. Philnico originally wanted to re-start the mine next year. Philnico is 55 percent owned by Hong-Kong based Compline Resources Co., about 30 percent by Australia's Pacific Energy Ltd. , and the rest by local investors. The Nonoc mines were operating from 1975 to 1982, with annual production at between 9,600 tonnes and 25,000 tonnes of nickel. It was closed due to high energy costs. Nonoc island has more than than 144 million tonnes of nickel ore reserves, according to the government, part of the estimated $1 trillion of untapped mineral resources in the country. |
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