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Palace official issues anomalous order backing Chinese firm illegally mining nickel

First of 3 parts

MALACAÑANG’s deputy executive secretary for legal affairs (Desla), Anna Liza Logan, known to be close to first lady Liza Araneta-Marcos, on December 23 blocked a directive by the Department of Environment and Natural Resources-Environmental Management Bureau that ordered a Chinese-controlled firm, Yinglong Steel Corp., to stop its illegal nickel-mining operations in Zambales because it didn’t have the required environmental clearance certificate (ECC).

The December 23 order appears to be part of a coordinated plan. Just a week after, on December 29, Yinglong was given by the DENR Regional Office 3 a permit to transport 250,000 metric tons of nickel ore, and an export permit for 50,000 MT of laterite nickel ore. At laterite nickel’s current price of $100 per metric ton, Yinglong would have shipped $4.5 million, or P250 million worth of the metal.

Desla Anna Liza Logan’s Dec. 23, 2022 order to DENR (left) to lift its cease and desist order against Yinglong’s illegal mining of nickel ore; right, Mines and Geosciences Bureau Regional Office 3 December 29 permit authorizing the firm to export the nickel ore.
Logan and first lady Liza Araneta-Marcos. SCREENGRAB FROM THE LAW FIRM’S WEBSITE IN 2012

Because of the rise in international prices of nickel ore due mainly to Russia’s war against Ukraine, exportation of nickel ore — the Philippines is the world’s second largest producer of the mineral — has become big money, especially since the ore in Zambales is the so-called laterite nickel found just near the surface, and therefore requires little digging.

If Yinglong had managed to sell locally or abroad the remaining 200,000 MT under the permit, it would generate revenues of P1 billion.

However, the DENR’s national headquarters was alerted by the export permits — rushed through the Christmas season — issued by its regional office. The MGB’s director Wilfredo Mancano, invoking the instructions of two DENR secretaries, ordered its regional office last Thursday (January 12) to revoke the mineral export permits. The next day, the head of Regional Office 3, Alilo Ensomo, resigned, writing that “it is time that I give back to my family and spend every possible moment with them.” He didn’t mention at all the nickel ore transport and export permits he had issued to Yinglong on December 29.

Illegal

The DENR since last year had asked Yinglong to stop its mining operations, which it deemed to be illegal. This is because Presidential Decree (PD) 1586 issued by President Ferdinand Marcos Jr.’s father 44 years ago, and reaffirmed in so many laws and regulations, required a company to have an ECC issued by the DENR or else it is deemed to be mining illegally, with its owners punishable by imprisonment and fines.

A Yinglong representative last week admitted that the firm had no ECC, but that its position was that it could use the ECC secured by the company that sold it its mining rights to the area. This is not true as PD 1586 categorically states that an ECC is issued to the person or corporation undertaking the mining operations in order to assure accountability.

A Filipino company, Westchinamin Corp., in 2021 assigned its mining rights covering 2,292 hectares in Candelaria, Zambales to Yinglong, with the agreement requiring Yinglong to secure its own ECC, as Westchimamin cannot under PD 1586 transfer its ECC to it. Especially as the mine’s site, Candelaria, is the hometown of Zambales Gov. Hermogenes Ebdane, the former police general and public works secretary, who since 2021 has been asked by local NGOS and Westchinamin officials to persuade the Chinese firm to stop its illegal mining. Ebdane however had ignored the pleas.

Another DENR office, the Mines and Geosciences Bureau (MGB), early last year also ordered Yinglong to stop its operations for not complying with other mining regulations. The Chinese firm however ignored these orders.

Stunned

DENR officials were stunned at Desla Logan’s order, which has been the subject of talk in the department as this had never happened before. Deputy executive secretaries and even the executive secretary have no authority to stop an order issued by executive departments. Only the president has the authority to do so. No such appeal against the DENR order, however, was brought to President Marcos and he had not authorized the executive secretary or his deputy to act on it.

What raised eyebrows at the DENR and the mining industry is the fact that Logan has been the first lady’s closest lawyer, whom she had recruited into her former law firm MOST (for Marcos, Ochoa, Serapio and Tan) in 2008, just two years after it was founded, until she was allegedly requested by Mrs. Marcos to join her husband’s office. She was appointed deputy executive secretary for legal affairs last September, after then Executive Secretary Victor Rodriguez was removed, reportedly at the instigation of the first lady with whom he had locked horns.

Logan’s chief legal officer is Rowena Sanchez, whose husband Manuel is a former Rizal congressman who held various positions in both Gloria Macapagal Arroyo’s and Benigno Aquino 3rd’s administrations, including DENR undersecretary during the latter’s administration. Lawyer Manuel Sanchez apparently has been assisting Yinglong legally and through other means.

He had sent his representative to meet me two weeks ago, who actually was the one who alerted me to this issue, although he tried to convince me that it was Westchinamin that did not comply with its deal with the Chinese firm. Yinglong, Sanchez’s man said, was unfairly “vilified and demonized viciously at the DENR and in the mining industry.”

Reorganizing

I had sent messages three days ago to the Presidential Communications Secretary Cheloy Garafil requesting for comments on this topic from the first lady. When pressed why she wasn’t replying to me at all, she messaged me: “Nagrere-org pa po kasi OP, Sir (Because the Office of the President was reorganizing).”

Yinglong certainly was audacious in mining for nickel and shipping it out since the original holder of the rights to the mine, Westchinamin, which assigned its rights to it in 2021 for $20 million (P1 billion), had been furious at it for not paying it the amount agreed upon. It claimed that based on its agreement with Yinglong, the failure to comply with the schedule of payments (in $5-million tranches from July 2021 to December 2022) automatically voids the agreement, and the Chinese firm must stop mining and vacate the area.

The Chinese firm didn’t.

Westchinamin claimed that most of the checks for the $20 million (P1 billion) agreed payment that Yinglong submitted to it had been dishonored by the banks. Only $850,000 could be encashed early last year. A Westchinamin lawyer said that in hindsight, it was Yinglong’s small payments that made it so complacent as to allow the Chinese firm to secure the mining area and extract nickel as soon as it could.

Westchinamin Chairman and President Antonio Marfori asked through three letters in August last year Environment Secretary Antonia Yulo-Loyzaga to formally rescind its assignment of rights to the firm and order the police to stop Yinglong from mining.

P1 billion

The DENR finally acted on Westchinamin’s request only in October last year, but not for Yinglong’s failure to pay the P1 billion under the agreement, but rather for the Chinese firm’s failure to secure the required ECC and other requirements needed to undertake mining.

The Desla’s order December 22 lifted the EMB’s order, the first time a Palace official overturned an order of a DENR office. “It emasculated the DENR in resolving matters within its sole and exclusive jurisdiction,” according to the motion by Westchinamin lawyers to the executive secretary. Logan didn’t even get Westchinamin side and violated rules of procedure for appeals to the president, among them that a notice of appeals and a bond must be submitted to the Office of the President.

More importantly, the Desla’s ruling to block the DENR order for Yinglong was flimsy: That the Chinese firm’s nickel stockpile had accumulated and therefore had to be disposed to prevent it from spilling into the Uacon lake.

Ridiculous

“This is completely ridiculous,” Westchinamin’s lawyer Victoria Florido said. “The lake is far from the mining area and spillage is not possible at all,” she pointed out. “It’s stolen mineral ore as Yinglong did not have an authority to mine it, and now the Desla is saying they can do whatever they want with the mined nickel since it poses an environmental threat?”

Yinglong seems to have such control of that area in Zambales that its real plan is to ship out the nickel it had mined, through another firm, the lawyer claimed.

Big money is involved here. The Philippines is the second largest miner of nickel, a necessary ingredient for the manufacture of stainless steel and lithium batteries, especially for electric cars. Refined nickel prices had zoomed up starting last year to hit $30,000 per ton because of fears that the invasion of Ukraine by Russia, the fourth largest producer, would reduce its exports as a result of Western sanctions. At that price, Westchinamin’s estimated laterite nickel ore reserves, if mined and exported quickly, could yield at least P3 billion in revenues for the miner.

Second part on Wednesday, Jan. 18, 2023


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This Post Has One Comment

  1. Dorina Rojas

    This is outrageous. We should wait for the Palace to give us an explanation because I simply can’t believe it.

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