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Mystery of the mining loan
By Conrado R. Banal III

Mystery shrouds the deal between the Singapore office of Deutsche Bank and the local mining company called Platinum Group Metals Corp.

Last October, Deutsche Singapore gave Platinum Metals a loan of $40 million, which -- even with the shrinking dollar -- should be more than P1.6 billion.

It is now the talk of mining town, and word has it that Platinum Metals has a backer at the Palace, aided even by an influential lady lawyer.

The $40-million loan should go to the Platinum Metals’ project to build a ferronickel smelting plant in Mindanao.

Questions arose in financial circles about the ability of Platinum Metals to get enough nickel ore supply for the smelting plant.

It seems Platinum Metals lost a big nickel mining rights in Palawan even before Deutsche Singapore gave the loan.

If this dirt hits the fan, this country may again suffer a big black eye before the world of finance.

Of course, you can only expect Deutsche Bank to do something about the Platinum Metal ease.

And it’s really an old boy’s club out there in international banking.

Two factors seem to figure prominently in the Platinum Metals smelting project, which financiers like Deutsche Singapore surely considered.

One is the loan guarantee of Philippine Export-Import Credit Agency, or Philexim, amounting to P500 million given to the mining firm in April 2007, in what prominent figures in the mining sector believed to be a fast-tracked approval.

Oops, that’s another agency under the Department of Finance.

The finance department is the same one that’s handling the controversy-laden lease of the Philippine government’s prime property in Tokyo, Japan.

Our contacts at the Department of Foreign Affairs wonder why one ranking official of DOF was often seen in Tokyo during the negotiations on the lease.

And nobody in the Tokyo embassy of the Philippines was informed about his trip to that city? Hmmm.

Anyway, the fast approval of the Philexim guarantee to Platinum Metals went around town as the work of the long arms of the Malacañang official and that lady lawyer.

* * *

The other crucial factor in the smelting project is an operating agreement between Platinum Metals and a company called Oriential Peninsula Resources Group.

The latter had a successful initial public offering (IPO) of stock last month, apparently on the strength of its thousands of hectares of mining claims in Palawan province.

But Oriental Peninsula also disclosed in its IPO that the government had already canceled the “operating agreement” that was brandied about by Platinum Metals to Philexim and, possibly, Deutsche Singapore.

That sent Philexim for cover, and its officials quickly withdrew the P500-million guarantee to Platinum Metals.

It turned out that the Department of Environment and Natural Resources (DENR) had already canceled the same “operating agreement” because of Platinum Metals’ violation of mining rules.

For instance, the rules say that small-scale mines are allowed an extraction rate of only 50,000 tons a year.

According to our DENR sources, Platinum Metals extracted about a million tons in just one year.

* * *

Even Environment and Natural Resources Secretary Lito Atienza seems to be watching the case.

He said it could affect the entire mining industry, which is supposed to be this administration’s lead sector for our economic resurgence.

Sure, said Atienza, Platinum Metals might have disclosed that the operating agreement was under litigation.

Still, the company did not say that the DENR actually canceled it when Angelo Reyes, now the secretary of energy, was the DENR boss.

* * *

According to a press statement purportedly coming from his office, Transportation and Communications Secretary Leandro Mendoza welcomed the Senate investigation on the embarrassing downgrading of the Philippines in the aviation rating of the US Federal Aviation Authority.

Everybody seems to enjoy congressional inquiries nowadays, is that it?

Anyway, I heard that some personnel of the government agency in the center of the FAA storm, the Air Transport Office (ATO), are preparing to testify in the Senate investigation.

Word has it that they intend to talk about a lot of corrupt practices at the ATO.

Anyway, in so many words, the press statement from Mendoza’s office indicated that the legislature also had lapses that led to the FAA downgrading of the country.

Congress still has to pass a modern law on aviation, for instance.

Still, the lack of modern legislation on aviation was not just the problem. In fact, the FAA noted six areas in which the Philippines did not meet international standards. The glaring lack of aviation law was just one of them.

For instance, the administration regulations of the ATO did not meet international standards, simply because ATO stopped issuing them since more than five years ago.

And those were just administrative orders, mind you. They did not need Congress to be done.

Also, according to the FAA, the ATO did not have qualified technical personnel to inspect the “air-worthiness” of the aircraft of commercial airlines.

Gosh, the ATO does not even have a training program for its personnel to become qualified technically.

Did Mendoza know that to test the licensed commercial pilots of foreign airlines, for instance, the ATO used to borrow “check pilots” from the Philippine Airlines?

Did he know that pilots of Korean airlines get the license from ATO to fly here, even if they do not speak English, which is a requirement for the freaking license?

Alright, so in terms of investment in technology, the Department of Transportation and Communications had already invested almost P200 million to rehabilitate the flight radar in Tagaytay City. You know, that huge circular contraption on the road leading to the famous Antonio’s garden restaurant.

The radar should become operational again this July.

There is only one minor problem: The ATO does have the facilities to process the data coming from the radar.

Let me see, and so ATO will have that working radar, but it still cannot read what’s going on in our friendly about-to-be-opened skies.

What good is that, really now, boss?



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