Azmar: It’s not 93-7 profit sharing

Azmar International disputed yesterday the claims that it would be getting a 97 percent share of the revenue arising from its proposed pozzolan mining on Mt. Pagan.

The proposer, now named Azmar International Trading Co. CNMI, said that more than half of the money earned would in fact be spent on shipping.

“The 93-7 profit claim is absurd. The biggest portion goes to shipping expenses,” said Azmar spokesman Don Farrel in a public comment period during yesterday’s jampacked board meeting by the Marianas Public Lands Authority.

In a presentation, Azmar said that 56.5 percent would be spent for shipping; 14 percent would go to the government, including a 7 percent royalty fee to MPLA; 15 percent for operating expenses; and 14.5 percent as revenue for Azmar.

However, Peter J. Pangelinan Perez of Gualo Rai and San Francisco said in a letter to the Senate that Azmar’s profit sharing proposal is “extremely one-sided.”

He said that, as demonstrated in a calculator posted on the website Chamorro.com, the deal is “a disaster for the CNMI.” For instance, he said that at a sales of $40 and a production cost of $30, the CNMI would get $632 million while Azmar would get $1.4 billion. This is based on a 7 percent royalty fee, 5 percent BGR tax and other fees for land lease.

He said that when the price is $70 and the cost is $30, the CNMI gets $1.3 billion and Azmar gets $6.6 billion. At a production cost of $10, the CNMI gets $1.5 billion and Azmar gets $10.5 billion, and so on.

Chamorro.com, run by Chamorros in San Francisco, California, said the proposal is flawed because “the CNMI’s share is always the same, 7 percent, no matter what the cost of production is, and after covering the cost of production, Azmar always gets 93 percent.”

The Association of Northern Islands Residents has also warned the MPLA against rushing into any mining deal. The group cited a report that more than 200 million tons of high-grade pozzolan are on Pagan, believed to be worth $45 to $70 per ton at today’s prices.

“No one knows the true market value,” said the group, but noted that “this is not a matter of a few thousand dollars. This is potentially a matter of billions of dollars.”

For his part, Farrell, who attended the meeting with Azmar president Kenneth Moore and other local representatives, said that Azmar’s proposal has “excellent terms for both sides.”

He cited that prices for finished Portland cement is $53 per ton. “And we know that there is no established [international] market for pozzolan,” said Farrell.

He said the company has the local community in mind ever since it made the proposal.

He said that Azmar’s original plan called for Pagan resettlement and pozzolan mining development project, which involved a $3.5 million budget for the construction of basic infrastructure in the area. The mining project, he said, would employ only local and U.S. citizens.

Farrell said Azmar is asking for a two-year mining permit “to begin the process.”

He said the project would require some 5,200 employees during the first six months.