REHABILITATION work on the mothballed refinery and mining operations of Philippine Nickel Corp. (Philnico) may begin as early as the third quarter of 2007 if talks with potential Chinese investors are concluded before year’s end.

Once clinched, the deal is worth an estimated $1 billion–double the size of the $500-million Northrail project–and will be the single-biggest investment of the People’s Republic of China in the country.

“We are in the process of negotiating with our Chinese counterparts and we hope to conclude this by December,” Philnico president Evaristo Narvaez Jr. said in an interview with the Inquirer. “With this timetable, construction can start by the third quarter of next year.”

The rehabilitation of the refinery will last up to 18 months and will initially employ about 3,000 workers from nickel deposit-rich Nonoc Island and Surigao City, he said.

The prospective Chinese investors are led by Jinchuan Nonferrous Metals Corp., the Baosteel Group and China Development Bank. Jinchuan is one of China’s biggest mining concerns while Baosteel is its largest steel refiner.

Narvaez said it was critical that the resources of the Nonoc mines be tapped as soon as possible given the high prices of commodities and metals in the world market in recent years.

The Philnico chief estimated that the price of nickel would average at $4.50 a pound due to continued strong demand from the industry-intensive Chinese economy, which continues to grow above 10 percent a year.

“At that price, the annual output of these mines would hit $500 million,” he said, adding that this would benefit not only the local economy of Nonoc and Surigao del Norte, but also the national economy as well.

“We have to take advantage of this trend as soon as possible because prices won’t stay [at these levels] forever,” he stressed.

Narvaez explained that the Nonoc nickel mines, which was in operation from 1972 to 1986, had proven reserves that would last at least 20 more years, and up to 30 years if other surrounding mining areas were developed.

Nickel is the main element used in making stainless steel. In recent times, demand for the metal has also been boosted by surging sales of electronic devices, which use rechargeable batteries like mobile phones and laptop computers.

Copyright 2006 Inquirer.