University of Chicago
Type of paper: Thesis/Dissertation Chapter
1. Statement of the problem
The Benguet Corporation refused to submit concentrate samples to the Philippine Associated Smelters and Refining Corporation (PASAR).
The Benguet Corporation faces shortage in producing their products and complying its contract to Mitsubishi Metal Corporation and complying the LOI.
2. Analysis of the case Strengths
The Benguet Corporation is the major producer of copper concentrates. It was the oldest mining company, the largest gold and chromite producer and one of the largest copper producers in the Philippines. Smelted
Benguet Corporation production was expected to decline steadily which results a negative impact to Mitsubishi Metal Corporation.
The Letter of Instruction (LOI) ensures the Philippine Associated Smelting and Refining Corporation (PASAR) an adequate supply of copper concentrates from all local companies which results/causes pressure to Benguet Corporation in submitting its samples to PASAR.
It is the biggest and oldest mining corporation started since 1903 and produces largest gold, chromite and copper in the Philippines. It is active in exploration for gold, copper, chromite and coal. Its expertise is about exploration, mining, beneficiation and marketing of minerals.
Benguet Corp. faces complaint from own shareholders. It also fears from selling their concentrates to foreign smelting and refining plants because of the mercury content which results Benguet enter into a 12year contract to Mitsubishi Metal Corporation.
3. Alternative Solutions to the problem
The Benguet Corporation provides 5-year summary of financial performance, including the individual subsidiaries’ contributions and the resulting effects which results of return of the company stakeholders. The Benguet Corporation tried to have a partnership to different small mining corporations which results higher operation employment and workers.
Since, Benguet Corporation worriedly looked for foreign buyers of its concentrates. The corporation decided to have a partnership with other foreign smelting and refining companies that could help them mercury content of their products.
The LOI helps the Philippine Industry to lessen its dependence of foreign especially Japanese smelter who processed most of the local mining outputs which PASAR does it best to cater the local mining corporations here in Philippines.
Since Benguet Corporation could not possibly meet its contract to Mitsubishi and fulfill its quota to PASAR, the Benguet Corporation must submit first its concentrates to PASAR to refine it before giving it to Mitsubishi Corporation to lessen the refining and smelting charges of the Japanese Corporations, so there will be no reimbursement of the total project price and there will be no contractual and workers would be affected.
4. Pointed Solution
The Letter of Instruction (LOI) was executed not for negative purposes but for the good of all mining corporations. These is the reason why the LOI 1387 forced and mandated all the local mining corporations to submit their products to the Philippine Associated Smelting and Refining Corporation (PASAR) for testing, refining and smelting of mining products before transporting it to the foreign companies but the Benguet Corporation president, Mr. Jaime V. Ongpin is doubtful to PASAR’s capability in smelting and refining their products. The reason why Benguet Corporation-PASAR Controversy. Yes the PASAR encountered difficulties on its first year but everyone deserves second chance. I believe that PASAR could help the Beguet Corporation on its problem about smelting and refining its concentrates and to lessen the mercury on its mining products.