GFNi says subsidiary did not violate rehabilitation fund guidelines

GLOBAL FERRONICKEL Holdings, Inc. (GFNi) on Tuesday insisted the Environment department has no basis to order the closure of its wholly owned subsidiary Platinum Group Metals Corp. (PGMC).

The country’s second biggest nickel producer said in a statement that PGMC received on Monday a show cause letter from the Department of Environment and Natural Resources (DENR) which “is neither a closure nor a suspension order.”

In the letter to PGMC President Dante R. Bravo dated Feb. 13, Environment Secretary Regina Paz L. Lopez directed PGMC to explain why it should not be held liable in violation of Section 71 of the Mining Act of 1995, which mandates mine permit holders create a so-called final mine rehabilitation and decommissioning fund.

According to DENR’s show cause letter, PGMC has only deposited P56.49 million out of a commitment of P1.26 billion.

Under the law, the funds should be deposited as a trust fund in a government depository bank and used for the rehabilitation of areas and communities affected by mining activities, as well for research on the social, technical and preventive aspects of rehabilitation. Failure to comply with this provision “shall mean immediate suspension or closure of the mining activities of the contractor/permittee concerned.”

However, GFNi denied the DENR’s allegations that its subsidiary failed to comply with the rehabilitation fund.

“The P1,259,670,677.00 has no basis. Based on the DENR’s records, the fund commitment of PGMC is only P74,593,674.00,” the listed nickel miner said.

GFNi said that a DENR mine audit team report validated that the final mine rehabilitation and decommissioning plan for the Cagdianao nickel expansion project was approved by the Contingent Liability and Rehabilitation Fund Steering Committee on Oct. 2, 2013.

It added the Mines and Geosciences Bureau issued a certificate of approval for the plan, confirming the fund’s total is only P74.6 million.

Also, GFNi said the audit report found PGMC “compliant with policies, environmental laws, rules and regulations of the Philippines Mining Act,” and has deposited P56.65 million for its rehabilitation fund.

As of Feb. 6, 2017, PGMC has a total deposit of P68,654,777.08 with the Development Bank of the Philippines in Surigao City. The company said it will deposit the remaining amount, which has yet to fall due under the prescribed schedule of deposits.

“PGMC will continue to implement various significant projects on social development, environmental protection and rehabilitation. It will conduct its business as usual, with first annual shipment scheduled in March 2017, weather permitting,” Mr. Bravo, who is also president of GFNi, said.

The nickel miner recently signed a supply contract to ship 1 million wet metric tons (WMT) to Hong Kong-based Baosteel Resources International Co., Ltd. — a partner since 2014 — at prevailing market price.

Early this year, PGMC had also signed supply agreements for the delivery of up to 3 million WMT. This puts PGMC’s take-up to 4 million WMT or about 70% of its expected shipment of 6 million WMT for 2017.

Shares in GFNi dropped 2.02% to close at P2.42 apiece on Tuesday. —