Fiction vs reality

In his May 4 “Letter to the people of the CNMI,” Bridgecreek’s CEO John Carlson portrays his company and partner company JG Sablan Rock Quarry Inc. as victims and would-be heroes of the CNMI people. He says he is “dismayed and confused.” According to Carlson, his company has lost money and John Sablan has lost money and it’s all the government’s fault.

Coming from the entertainment capital of the world, it is not surprising that Mr. Carlson tells a good tale. Like all good storytellers, he plays with the facts—exaggerating some, forgetting others, and even making up a few. Well, the trend these days is “reality entertainment,” and with this in mind, I think it is time for viewers to have the facts. After all, reality is much more interesting than fiction…

Fiction: The terms of the Joint Venture Agreement were fair and would have benefited the CNMI the most.

Reality: The terms were grossly exploitive of the CNMI. For every ton sold at $36, the CNMI would have received about $3. John Sablan would get $6 and Bridgecreek would get $12 plus another $1 toward full reimbursement for investment capital. Then 100 percent of anything over $36 per ton goes a third to John Sablan; two-thirds to Bridgecreek; and zero to the CNMI.

Fiction: JG Sablan’s role in the venture was to conduct the mining operation.

Reality: According to their JVA, JG Sablan would have no other role than to interface with the government and maintain the permit. Bridgecreek was to hire an outside mining operator. In other words, JG Sablan would do essentially nothing except rake in the profits.

Fiction: JG Sablan is paid up on all Pagan fees and royalties.

Reality: According to the Department of Public Lands, JG Sablan remains in arrears on Pagan by $345,914.17.

Fiction: Bridgecreek has committed $10 million of its own money to the project.

Reality: The JVA clearly limits Bridgecreek’s total investment to $5 million, which can include funds from outside investors and loans.

Fiction: Bridgecreek’s Chinese buyer is only willing to pay $18 per ton and the price is dropping.

Reality: The JVA established the minimum price at $36.25 per ton and set the terms for profit sharing at higher prices.

Fiction: There are only 30 million metric tons of pozzolan on Pagan.

Reality: University of Hawaii geologists estimated that between 200 and 800 million metric tons of ash fell on Pagan in 1981. This figure, as well as how much of the ash is pozzolan, needs to be verified. Early JG Sablan documents consistently cited 200 million tons.

Fiction: Bridgecreek was led to believe that the governor supported their bid.

Reality: Not true. Gov. Benigno Fitial never wavered in his commitment to create a mining task force and put Pagan mining out for bid.

Fiction: Bridgecreek believed that the JG Sablan permit was valid and was caught by surprise when Public Lands declared it to be invalid.

Reality: In December 2005, PaganWatch provided Bridgecreek with overwhelming documented evidence that the permit was invalid. Furthermore, PaganWatch encouraged Bridgecreek to pursue a legitimate permit and made it clear that any attempt to use the JG Sablan permit would be challenged in court.

Fiction: JG Sablan satisfied all regulatory requirements, including an Environmental Impact Study and was free to operate a mine on Pagan.

Reality: According to CRM, JG Sablan does not have a CRM permit to operate a mine on Pagan. Further, any EIS for JG Sablan’s operation, if one even exists, would not be valid for a new third-party operator.

Fiction: The DOI’s David Cohen endorsed the Bridgecreek/JG Sablan joint venture and would consider any government failure to ratify the joint venture to be anti-investment.

Reality: Cohen never endorsed the joint venture but he does support fair and equal treatment of all potential investors, which is the goal of the open-bidding process that the mining task force will provide. In Cohen’s own words, “We don’t endorse any particular company or project. We try to provide an opportunity for off-island companies, local businesses and the local government to come together, and then let the relevant parties determine on their own whether the conditions are right to move forward. What we do ask is that all companies, including off-island companies, be treated fairly, and that the process that they face in the CNMI is transparent and free of favoritism.” Cohen also maintained that fair treatment does not mean the CNMI should automatically give what potential investors ask for. The government needs only to be fair, reasonable, consistent, transparent and responsive in its dealings with potential investors, he said.

Fiction: The failure of the joint venture means a loss of revenue for the public schools.

Reality: There is no mention whatsoever of funding public schools in the JVA. If any funding were provided to public schools by Bridgecreek as a donation, those funds would have to come from the exploitative pozzolan-profits scheme. A non-exploitative profit split would bring far more money to the entire CNMI communities, including the schools.

Fiction: Bridgecreek and JG Sablan are motivated by a sincere desire to help the community.

Reality: Bridgecreek and JG Sablan are motivated by money—many hundreds of millions of dollars. Their $18 per ton profit from 100 million tons of pozzolan would be $1.8 billion dollars.

Fiction: The people of the CNMI owe JG Sablan for his efforts to mine Pagan.

Reality: The CNMI owes JG Sablan nothing. He squandered his opportunity and, in doing so, denied the CNMI of badly needed mining revenues for over a decade.

Peter J. Pangelinan Perez
PaganWatch