Announcement of IFC Investment of Fifteen Million US Dollars in Philippine Nickel Project on December 20, 1971

" II F~OR IMMEDIATE RELEASE • , "INTERNATIONAL FINANCE 0 c'oRPORATION . 1 8 1 8 H STREET. N.W., WASH IN~TON D. C. 20433 TELEPHONE: E?(ECUTIVE 3-6360 ''IFC Press Release No. 71/23 December 20, 1971 1: $245 Million Philippi!le Nickel Project IFC to Invest $15 Million The Internation.al Finance Corporation is jo}ning a multi-national invest- ment g}:oup in supporting a $245 million nickel mining project irt the Philippines. The project is to develop a nickel mine ~nd to construct and operate a 1·efining plant with an annual capacity of about 75 million pounds of nickel and (\ a.bout 3 million pounds of cobalt. It is being carried out by Marinduque Mi.ning and Industrial Corporation (MMIC), a Philippine company mining, producing and • exporting copper ores, concentrates and various copper by-products, and manufacturing cement. Major benefits to the Phii~ppine economy in terms of increased foreign exchange earnings, jobs created and additional government revenues are expected over the life of the project, estimated to be 21 years on the basis 0£ proven ore reserves. Background '.\ The laterite nickel deposits to be developed by NMIC under a government award are located in the province of Surigao del Norte, on Nonoc and nearby islands on the northeastern coast of Mindanao, about 450 miles southeast of H:mila. MMIC in 1968 entered into a licensing and operating agreement with Sherritt Gordon Mines (SGM), of Canada, under which the Canadian firm will help design, build and operate the nickel refinery. SGM will also provide MMIC on • an exclusive basis within the Philippines with all its processes relating to the recovery of nickel and other metals contained in late rites. /more The technical  IFC P.R. No. 71/23 -- P.hilippines - nickel •• • - 2 - feasibility of the prpcess to treat the Nonoc late:rites has been demonstrat~d ,, at a pilot plant in Canada. MMIC's concession is for 25 years, renewable for another 25 years, expir.fng in 2018. Financing: IFC is inv~sting $15 million iµ the project, in the form of subordinated debentures with detachable warrants tg buy MMIC slrares. MMIC shares are widely owned by local and foreign private investors, with the majority held by Philippine private investors. The shares are being traded on the American Stfock ;;I ..7 Exchange _in New Yqtk and in the Manila and Makati stock exchanges in the Philippines. About $20 million in equity financing required for the project will be ~ purchased by Philippine Governn~nt financial institutions tmder an arrangement which permits MMIC to repurchase up to $16 .5 million of the Government shares for resale to private investors tmtil June 30, 1974. Sherritt Gord.on Mines will provide a further $5 million in equity, subj e~t to certain condi.tions. Senior loan financing of approximately $165. 5 millicn. is being provided by United States and Japanese sout·ces, including the U.S. Export-Import Bank, and Kobe Steel Works Ltd. The remainder of the financing, totaling about $38 million, is expected to come from funds generated by MMIC's existing operations d'uring the project construction period. Economic Effects: The nickel proje,ct is expected to begin operations in mid-1974 and to • generate net foreign exchange earnings of about $20 million by 1976, rising to approximately $62 million a year by 1986 and thereafter. MMIC has negotiated /more • t i IFC P ~ R8 No. 71/23 -- Philippfoes -·,,;cnickel JJ • - 3 - long-te~( contracts for the sale of. a major part of the project's expected ! output to United States and Japanese companies. Over its entire life, the project is expected to generate net foreign exchange eam:l.ngs of more than $1,000 million. In addition, the project is expected to create some 2,000 jobs. A town- ship for 12,,,000 people is to be established on Nonoc C':island to accommodate workers arid their families. Further, the Government of the Philippines is expected to derive substantial revenue from taxes, royalties and other fees upon start of commercial production. This income is exp~cted to reach a level of about $15 million during each full production year subsequent to 1980 • • - 0 - •