Marinduque earns $22 million profit after 3 dry years extracting ores
If Don Jesus S. Cabarrus Sr. was an American executive, he might be called a "workaholic." The founder and chairman of Marinduque Mining & Industrial Corporation, the second largest corporation in the Philippines, says he works seven days a week from 8 a.m. to 6 or 7 p.m.
Well beyond the normal retirement age, Mr. Cabarrus can usually be fond at his Manila office on weekdays. On weekends, company pilots fly him in an Aero Commander to the firm's major nickel-cobalt and copper-silver-gold mines scattered about the Philippine Islands.
In 1979 Marinduque Mining made $22 million on $273 million in revenues, the first profit in three years. This year, however, the company, listed on the American Stock Exchange and 36 percent owned by foreigners, will once more lose money, Mr. Cabarrus predicted in an interview. "That's because of the increase in oil prices," he noted. Oil and its products are used in large amounts in the processing of nickel ores, indeed to some 70 to 80 percent of the cost.
Mr. Cabarrus is one of the minority of Filipinos who speak Spanish at home. One of nine boys, he began his career as an accountant for Findlay Miller Company in 1932. Shortly, he switched to a similar job with La Carlota Sugar Central in Negros Occidental, a company managed by an old Spanish firm, Elizalde & Co. He rose in the parent company to become executive vice-president.
Then, in 1949, he launched his own company, Marinduque Iron Mines Agent Inc. to operate a small iron mine in Taluntunan, Marinduque Island. The company exported its iron ore to Japan. The firm was launched with 50,000 pesos ($6,750 at today's exchange rate).
Today Marinduque Mining (its name was changed in 1963) has total assets of $1 .3 billion and total stockholders' equity of $798 million. Mr. Cabarrus still owns some 9.5 percent of the stock.
When the iron ore ran out, the company in 1954 shifted to mining copper. It developed two of the nation's rich copper reserves -- Sipalay in Negros Occidental and Bagacay in Samar. These two yield about 28,000 tons of copper metal a year. At Sipalay, the plant facilities are being expanded currently from handling 18,000 metric tons of ore per day to 30,000 tons per day.
The company diversified into the manufacturing of cement in 1967. A year later the company began work on its biggest investment -- the construction of a of Mindanao.
Nickel deposits on the island were discovered way back in 1933. But at that time no economic way of extracting the metal from the laterite ore was known, even though the deposits are one of the largest nickel finds in the world.
During World War II Sherritt Gordon Mines Ltd. of Canada developed a "modified reduction roast ammonium carbonate leach process" to extract the nickel and cobalt from laterite ore. Marinduque reached an agreement with Sherritt on using the technology. (Sherritt owns 11 percent of Marinduque today.) Then it put a successful bid in with the government for the property.
Construction of the refinery was completed in 1975 and soon it became one of the world's largest supliers of nickel and cobalt.
It is here that Mr. Cabarrus faces the challenge of drastically reducing the consumption of expensive oil.
"We approached the Philippine government and said we could not continue with these increases in oil prices," he recalled. "Either we solve this problem or close it."
With the backing of a government loan guarantee, the company has begun a $100 million project to convert from oil to the use of coal. It involves purchase of two new units of coal-fired boilers that feed the combustion chambers of four ore dryers. In addition, there is a new pier capable of berthing 60,000 ton ore and coal carriers, unloading facilities, a conveyor system, and stockpile and reclamation areas. Spain will provide much of the equipment and financing. The coal will come primarily from a new mine being developed near the company's copper mine at Bagacay.
Mr. Cabarrus expects a payback of the capital costs in 2 1/2 years. "In the meantime," he says, "you just have to fasten your belts."
The company has several other projects to trim costs or enhance metal recovery from the Nonoc mine and the copper mines.
Meanwhile, the nickel refinery continues to produce metal -- last year 65 million pounds of nickel worth $127 million and 3 million pounds of cobalt valued at $70 million.
Mr. Cabarrus has hopes that the tailings of the plant, containing about 50 percent iron, could be beneficiated to 57 or 58 percent. This might make it suitable to feed a sintering plant further west on the coast of Mindanao.
There are already 15 million tons of the tailings. They are piling up behind dikes that must be raised 3 meters a year to hold the wet material.
Last year the company mined 6.6 million metric tons of copper ore at Sipalay and 224,515 tons at Bagacay. The ore, taken from open-pit mines, also includes some gold and silver.
Copper is the most important metal mined in the Philippines. In fact, copper concentrates from the nation's 17 copper mines are the nation's second most important export after coconut oil. They provided $250 million in foreign exchange in 1978.