The following is from the Manila Standard and gives a good...

The following is from the Manila Standard and gives a good insight into the politics....


Lafayette’s savior January 18, 2006

The Australians’ white knight is really a Pinoy.

The big news in business is the entry of Carlos Dominguez, former environment and agriculture secretary, into troubled Lafayette Mining, the company that operates the Rapu Rapu Island polymetallic project off Legazpi City in Albay province.

According to a press release from Australia-based Lafayette, Dominguez’ entry signifies “the strengthening of the company’s operational management team with the introduction of a Filipino partner to oversee operational and administrative activities in the Philippines.”

Sonny Dominguez’ resumé does qualify him as a business whiz. Apart from the Cabinet positions that he held during the administration of current Black-and-Whiter Cory Aquino, he was former chairman, president and CEO of Philippine Airlines; and former chairman, president and CEO of the Philippine Associated Smelting and Refining Corporation (Pasar).

This last post is a definite plus in his new incarnation as chairman, president and CEO of Lafayette’s operational arm, Lafayette Philippines Inc. Sonny also brings his former Pasar team with him to Rapu Rapu, led by respected professional metallurgist Manny Agcaoili.

According to Lafayette — and here’s another indication of Dominguez’ real role in the company — Dominguez also “heads a group of international investors who will invest a minimum $1 million Australian in Lafayette Mining Ltd. through a placement of 10 million newly issued shares at 11 cents a share.”

“We are pleased to secure the direct financial interest of Mr. Dominguez and his associates as a substantial shareholder as well as the services of a successful management team led by Mr. Dominguez,” the statement said. “Mr. Dominguez brings considerable expertise and experience to our local management team, and he adds a Filipino perspective to our Board. He has an outstanding track record of achievement in the Philippines and across Asia.”

So far, so good. Now for the stuff Lafayette only hinted at in its press release.

One of the major reasons Lafayette is bringing in Dominguez is his mojo with the government. As former DENR secretary, Sonny — the Aussies believe — can make their troubles with the government regulatory agencies go away.

Everyone now knows that Lafayette has run afoul with DENR, which found cyanide in the water on the island. Cyanide is an important chemical agent to extract the gold from the ore dug up in the mine.

The mine has been slapped an indefinite suspension, something the cash-strapped company can ill afford at this time. The government also ordered Lafayette to pay a fine of more than P10 million, representing a penalty of P200,000 a day from Oct. 11 to Dec. 26. The fine just keeps on getting bigger with every day that cyanide is found at the mine site. The last water sample taken from a stream nearby — just last Jan. 6 — also tested positive for cyanide, so that’s more trouble for the Australians.

* * *

Right now, Lafayette needs an ISO 140001 certification, which will prove that it complies with international environmental standards. But getting the certificate takes time, time that the company doesn’t have at this point.

The second reason for bringing in Sonny Dominguez is his ability to raise financial war chests for big corporate projects. Locally, this means the Alsons group of the cash-flush and politically well-connected Alcantara family. The Alcantaras already have a foothold in the resurgent local mining industry, maintaining an option to buy 10 percent of the ore-rich Tampacan mine in South Cotabato that is controlled by Tony Robbins’ Indophil.

The investors that Lafayette talks about could also be the Canadian group he brought in to deal with the Licaros family to fund mining projects in Palawan.

It could also be Glencore, the Swiss firm that hired Dominguez to run Pasar. It could even be the sultan of Brunei, whom people believe Sonny fronted for to build the Marco Polo Hotel in Davao City.

Scuttlebutt has it that Dominguez would bring in the Alcantaras as soon as he gets an idea of the viability of Rapu Rapu, which could be soon. If the family passes on the project, he could bring any number of his foreign “associates,” as Lafayette calls them.

Fact is, Lafayette is really in dire need of a big financial infusion from anywhere. The company reportedly raised $10 million recently in the Australian stock market by offering new stocks (sold at 14 cents a share) to investors there in the wake of closure order. They needed the money, sources say, just to fund its operations while the mine was shut down temporarily.

At present, Lafayette is deep in debt with the banks, to which the company owes $35 million. It also had to bring in the Kores Group of Korea, which gave Lafayette $10 million in exchange for the rights to buy up all the copper produced by Rapu Rapu.

To its credit, everyone agrees that the Rapu Rapu project is financially very viable if Lafayette can get its act together and operate the mine commercially.

In the meantime, the Australians are pinning their hopes on Sonny Dominguez. As they say, abangan!