Nickel ore, Indonesia and responsible mining

I saw this Rappler interview yesterday of my friend (way back from UP Diliman in the 80s) JB Baylon of Nickel Asia Corp. (NAC), 22+ minutes long.

jb

Lots of topics discussed and I like his analysis of politics at the Commission on Appointment (CA), let me summarized his points:

1. PH politics, like the US politics, is characterized by the House of Representatives (HOR) being closer to the President than the Senate, so that whatever the President decides about the fate of his/her Cabinet/Secretary appointees, the HOR will vote usually as a bloc. Senators tend to be more independent of the President because many of the guys there aspire to become the future President or VP.

2. The HOR voted as a bloc — in rejecting Gina Lopez as DENR Secretary. Only one voted to confirm, I think it was Congw. Sandy Ocampo from Manila. This vote would reflect as the “President’s vote” and hence, insinuations that it was “mining lobby money” that defeated Gina is wrong and arrogant. Arrogant and condescending because it implies that Gina is “so right” that only people who are wrong, who are “bought” by lobby money would reject her.

Aside from Rio Tuba, the interview by Ms. Mara Cepeda of Rappler also covered other NAC companies like Hinatuan and Taganito. I got this slide from a presentation by Ramon Adviento of Global Ferronickel Holdings, “Philippines Nickel: the importance of Philippine ore” on November 03, 2015.

ramon-adviento-global-ferronickel-holdings-inc-the-importance-of-philippine-ore-6-638
Other topics covered:

1. On the appointment of new DENR Secretary Roy Cimatu, JB said that the law is there, in black and white, any DENR Secretary should uphold and implement the law. If he/she does not like the law, going to Congress and ask for amendment is the thing to do, not create Department orders/laws.

Related to this, I like this quote from former US Supreme Court Justice Antonin Scalia, something like this, “the law says what it says and does not say what is not covered.”

2. Indonesian nickel vs PH nickel. The former is of higher grade (hence, higher market price) compared to the latter and hence they are generally not competing in terms of quality and pricing.

3. Responsible mining like Rio Tuba allows a poor and possibly mendicant municipality of Bataraza — at the southern tip of Palawan, no road from Puerto Princesa, so isolated some 40 years ago when Rio Tuba mining was started — to become a 1st class municipality.

4. Rehabilitation of a mining area, the area should be mined out first, meaning no more significant volume of ores to be recovered, then the area can be contoured, covered with topsoil, planted with tall seedlings for faster reforestation.

5. Processing of mineral ores domestically before they are exported, JB said that one would need (a) big volume of ores to have economies of scale, (b) big/rich foreign partner because of the high capex required. In the case of Rio Tuba, NAC owner Manny Zamora was able to cultivate long-term business partnership with the Japanese company Sumitomo (?) for the processing of low-grade nickel ores.

I think one would also require a huge power plant with cheaper, stable energy source like coal or nuke or natgas to process these ores into intermediate products. It would require hundreds or perhaps thousands of degrees Celsius to do such processing. It was not possible until a few years ago because of the low or weak power supply capacity of the Philippines. But now, there is ample supply of cheaper, stable energy from mostly coal power plants.

I thought that Rappler was generally anti-mining, but this interview by Mara Cepeda was good. She asked straight questions and the conversation was smooth and casual.

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