Leading Philippine smelting company makes its presence felt

One of the drawbacks of privatizing sluggish, non-performing companies is that you often get well-meaning entrepreneurs who make their living speculating on how cheaply a sluggish, non-performing public entity can be bought, repackaged and sold at a tidy profit.
Once in a while, as was the case of the Philippine Associated Smelting and Refining Corp. (PASAR), it turns out that, under the right management, the non-performer ends up evolving into a profit-making entity.
PASAR had been established in 1976 as a copper smelter and refinery. One of 11 major industrial projects launched by the government, PASAR was joint financed by the National Development Company, a consortium of Philippine copper mining companies, the World Bank, and a consortium of Japanese trading companies.

Carlos G. Dominguez Chairman and President of PASAR

At about the time that the former Ramos administration put PASAR on the block, merchant banker Carlos G. Dominguez was in the market for a suitable investment opportunity. “One of my friends suggested PASAR. So we started working on it. We packaged it and then went around looking for a strategic partner,” Mr. Dominguez recalls.
In June 1999, a consortium of Philippine investors and a Swiss trader, Glencore International, acquired 90% of the government’s shares in the company. According to Mr. Dominguez, chairman and president of the company, “for PASAR, for Glencore, and for the Philippines as a whole, this is a very good deal. We bring our knowledge of the Philippine market and Glencore brings its international know-how.”

In October, PASAR, under Mr. Dominguez’s leadership, announced trade agreements with China Minmetals and the Philippine state-owned utility National Power Corp (Napcor) worth about $50 million for 2002.
Minmetals agreed to purchase a minimum of 24,000 metric tons of copper cathode from PASAR for around $35 million. Another estimated $13 million agreement signed included a three-way trade deal whereby PASAR will supply copper cathode to Minmetal, who will supply coal to Napcor, who will then supply electricity to PASAR .
The deal will give PASAR firm footing in the growing Chinese market and lead to PASAR’s export of other products. It will also help lower the company’s light bill. PASAR currently consumes more than $1 million of electricity per month.