‘Suspend negotiations, put out RFP’

Azmar International may now have to compete for the right to mine pozzolan on Pagan, after the Marianas Public Lands Authority management yesterday recommended that the MPLA board of directors suspend all existing negotiations on Pagan mining and instead put out a request for proposals from all interested investors.

This came as MPLA property management chief Franz Reksid cited uncertainties over Azmar’s qualifications and its proposal to conduct pozzolan mining on the northern island.

Reporting on behalf of the MPLA staff, Reksid said one of the major reasons behind the recommendation was the changes made by Azmar on its quotation of the price of pozzolan.

He recalled that when Azmar earlier asked for an exclusive 20-year mining permit, it made a quotation of $46 per metric ton of pozzolan and promised to give the government 7 percent of the revenues generated. The company, however, came back and made a lower offer of $16 to $18 per metric ton.

Reksid also noted that at present, MPLA does not know for sure if pozzolan exists on Pagan, much less the amount present on the island.

He said the studies presented so far are unofficial. It would be better, he added, if MPLA waited for the findings of the U.S. Geological Survey, which Public Lands has asked to survey Pagan for pozzolan.

Further, he raised concerns about the capability of Azmar to mine on the island. He said that the company—whose sole shareholder is its president, Ken Moore—has failed to provide MPLA a permanent office address and a credible proof of funding source.

“There is a claim that there are three places with the best quality of pozzolan in the world—Greece, Italy, and Pagan in the CNMI. Regardless of the exact amount of pozzolan on Pagan, the staff believes that the board should proceed with caution before it issues any mining permit for Pagan,” he said.

According to Reksid, the MPLA staff could put out a request of proposals from interested investors within 60 days upon the board’s approval of their recommendation.

“With an RFP, we will be in a better position to negotiate a permit. An RFP will [provide a clearer picture of] the impact that pozzolan mining on Pagan can have on the CNMI’s economy, protect Pagan’s pristine environment, and attract other investors,” he said.

He also urged the board to make a final determination if J.G. Sablan still possesses mining rights to Pagan. MPLA earlier held J.G. Sablan in default after it failed “to generate and/or report any revenue to government from its activities on the premises for two consecutive years.”

If the board finds that J.G. Sablan continues to have mining rights to Pagan, the RFP would then be limited to a small area on the island.

The MPLA board deferred action on the staff’s recommendation and will meet again on Tuesday.

But yesterday, at least one board member expressed partiality to the MPLA staff’s proposal.

“Azmar keeps changing its application every now and then. We’re getting confused,” said board member Nicolas M. Nekai. “We’re going to do an RFP so that we would have a fair treatment to Azmar or anybody that has submitted this proposal. At the same time, we and the USGS are in the process of determining the actual amount and the quality of pozzolan on Pagan. So in actuality, we’re trying to buy time and make sure that the best interests of the CNMI indigenous people are being served. We’re not really that educated on [the] mining of pozzolan, but we would try to get the best deal out of it without destroying the island.”

For his part, Azmar local spokesman Don Farrell said Azmar’s proposal was based on studies that professional volcanologists from the University of Denmark and another university in the United States did shortly after the eruption of Pagan in 1981.

“These studies are apparently unacceptable to [the MPLA staff], or they are ignorant of the fact that it exists even though the other companies that have already applied for permits also use the same studies,” Farrell said.

He also explained that MPLA chair Ana Demapan-Castro herself had asked for the change in the price quotation. He said the initial quotation of $46 per metric ton was based on the price that Moore got among potential buyers, plus the cost of shipping from Pagan to its point of destination.

Demapan-Castro, however, asked Moore to provide a quotation reflecting the product’s price before it is shipped from the CNMI “or before we got paid.”

“Now this is a rather unusual request, but Mr. Moore agreed to that. He also agreed to three mechanisms to ensure that MPLA will be paid their royalty,” Farrell said.

He cited that if given a mining permit, Azmar would be required to post a deposit equal to the amount of royalty that could be expected from the delivery of 50,000 tons of pozzolan.

MPLA has also been guaranteed that it will be given a copy of any agreement Azmar reaches with a buyer, as well as a letter of credit containing the assurance that MPLA would be a secondary beneficiary to the transaction.