Pagan mining permit terminated

The Fitial administration terminated yesterday the 1995 mining permit issued to J.G. Sablan, citing various violations, including its recent “unauthorized” partnership with Bridgecreek.

At the same time, Gov. Benigno R. Fitial formed a task force conduct a feasibility study and to award a new mining contract to “the most qualified” company.

Department of Public Lands Secretary John S. Del Rosario announced the termination of J.G. Sablan Rock Quarry Inc.’s permit in a news briefing at the Governor’s Office.

In the notice of termination, Del Rosario cited the following alleged violations by the company:

* Failure to generate any revenue for the CNMI for two consecutive years after the 1995 permit issuance, as provided in Article 3 of the permit;

* Failure to provide the government within 180 days after issuance of the permit of a detailed proposal on how it intends to develop pozzolan and basalt recovery, as provided in Article 10;

* Failure to get a prior consent from the government when it entered into a joint partnership agreement with Bridgecreek on Dec. 3, 2005, as provided in Article 14;

* Violation of Article 1 of the permit by operating outside the designated area;

* Failure to pay royalties and other payments under an earlier permit in 1993, now totaling $345,914;

* Failure of the company to clearly implement the 1995 permit for more than nine years.

‘Outrageous deal’

In his statement, Del Rosario that both J.G. Sablan and Bridgecreek failed to comply with Article 14, which requires getting the government’s approval for their joint venture.

The official claimed that, from Dec. 3, 2005 to April 20, 2006, the business partners refused to give the government a copy of their joint agreement.

In fact, the companies provided the defunct Marianas Public Lands Authority only the first, ninth, and 10th pages of the 10-page joint agreement, he said.

“It is clear now why the two companies wanted to conceal this document. It sets forth a program for exploitation of Pagan’s unique resources that results in the outrageous enrichment of the two companies,” said Del Rosario.

He said the agreement assumes that the price of pozzolan per metric ton is about $35, and projected a payment of $3.50 to the CNMI government; $2 for extraction; $2 for transportation; $8 for undefined operational costs; and $1 for return of invested capital.

Of the remaining amount of $18, the agreement provides that $6 goes to J.G. Sablan and $12 to Bridgecreek.

He said the partners placed the Pagan pozzolan deposit at a modest figure of “no more than 30 million tons.”

PaganWatch, however, claims that the mineral deposit is about 180 million metric tons.

Another proponent, Azmar International, initially estimated the deposit to be at 200 million tons.

Taking 100 million tons as an example to illustrate the partners’ scheme, Del Rosario said this would translate to $350 million payment to the Commonwealth, $600 million to J.G. Sablan, and $1.2 billion to Bridgecreek.

If the price goes to $50, he said the government would not receive a penny more but J.G. Sablan would get a third or $500 million for a total of $1.1 billion and Bridgecreek would get two-thirds or $1 billion for a total of $2.2 billion.

“With these figures in mind—and these are their figures—no one should have any doubt about the Commonwealth’s justification in terminating the 1995 permit to J.G. Sablan,” said Del Rosario.

JG Sablan has 60 days to respond to the government’s notice.

Kaipat heads task force

Fitial created yesterday the Governor’s Pagan Mining Task Force and appointed Rep. Jacinta M. Kaipat as chair.

Kaipat is a co-founder of PaganWatch, an advocacy group that heavily opposed the award of a mining permit to Azmar and lobbied against the continued presence of J.G. Sablan on Pagan.

The group had cited the lack of a comprehensive feasibility study, among others, as reasons for their action.

Fitial appointed the following as members of the task force: Sen. Maria T. Pangelinan, Rep. Absalon S. Waki, Northern Islands Mayor Valentin Taisakan, Coastal Resources Management director John Joyner, Ray Mafnas, Public Lands director Jerome Aldan, civil engineer Pete Sasamoto, governor’s special adviser Howard Willens, and PaganWatch co-founder Peter J. Perez.

They are tasked to prepare a Request for Proposal to solicit applicants for Pagan mining and do a feasibility study within 60 days.

Kaipat, who was present in yesterday’s news briefing, said the government aims to give eligible applicants the chance to present their proposals. She said the RFP would be open to Bridgecreek.

“We want this to be a win-win deal to benefit the entire Commonwealth,” said Kaipat.