Wednesday, 14 August 2013

FOCUS: All the time, problems dogged Larap iron mine

The ex-pelletizing plant on Calambayungan island. 


LITTLE did the people of Larap, who were once among the most affluent in the province of CamNorte, know that the iron mine was being plagued with production and technical glitches.

The mine operator, Philippine Iron Mines (PIM), could not produce the quality of iron ore that Japan needed for its steel industry, and therefore could not sell all the iron ores it mined.

Couple this with the sudden drop in the value of the Philippine peso against the US dollar, from the highs of P4 to P6.40, to a crashing P40, an aftermath of the devaluation carried out by the Philippine government with the declaration of Martial Law.

That’s why when the miner decided to close shop and abandon the project in middle of 1974 after the underground mine was flooded by water leaks from the main open pit, which could not be drained, a tsunami of shockwave swept across and devastated the mining community.

The Larapenos’ seemingly endless “merry-making” ground to a sudden halt, and those who were caught with no centavo in their pocket melted away, while others who had stashed some jumped ship and moved on with their lives.

Those with no place to go stayed put and fought for daily survival – even up to these days, 39 years after the PIM demise.

The mine's open pit ... over the years it has morphed into an artificial lake.

The problematic operations at the Larap mining camp was revealed in a recent technical report put together by a team of engineers – all Larap veterans – comprising four Japanese and one Filipino.

The report titled History of the Larap Pelletizing Plant was authored by engineers Koichi Hayase, Takao Tanaka, Akira Oda, Takashi Ohshima and G B Evangelista.

Iron ore deposit was first discovered in 1910 on Calambayungan Island near Larap, the report said.

And seven years later, a Japanese group Kuhara Kougyou got a mining concession and started operations and exported to Japan but stopped after World War 1 plunged to a recession.

In 1930, the Atlantic Gulf & Pacific (AG&P) Co USA got the concession and set up the Philippine Iron Mines (PIM) with Soriano Co (Philippines).

Iron ore export to Japan commenced through the Iwai Sangyo of Japan.

In 1936, a big iron ore deposit was discovered in mainland Larap, so mining activities were transferred from Calambayungan to the mainland mining camp.

During the post-war years, mining operations went deep areas (underground  and open pit mining) and began encountering problems.

The iron ore extracted had low Fe (iron) contents and high sulfur content, an impurity that had to be eliminated.

To improve the quality of the Larap iron ore, the Japanese industry worked by engaging a Japanese group – Nittetsu Kougyo – to find ways to upgrade the Larap iron ore.

The group came up with a recommendation but it was still difficult to get satisfactory results to increase Fe contents and decrease Sulfur contents.

The problems persisted until 1960, with the quality of the Larap iron ore remaining substandard. Several approaches were further taken, but did not produce the desired results.

PIM finally adopted the Kawasaki Sintering Corp (KSC) shaft furnace scheme, or the pelletizing process, as it had several advantages such as low initial cost compared with other process with higher operational costs.

Likewise, the Philippine Sinter Corp owned by KSC gave PIM a long-term deal on the purchase of pellets.

While the construction of the pelletizing plant was being completed on May 1965, a team of four young Filipino engineers from PIM was sent to Japan for the training at the plant of Chiba Works, KSC.

The  pellet shaft furnace. - All pictures courtesy of TAKAO TANAKA & Co.

The plant being completed in 1965, operations followed. However, from the start of operations until January 1966 – a period of eight months – the operations were below par because of block formation in the shaft furnace.

All this came about despite the presence of five to seven KSC engineers who stayed in Larap as operations supervisors. Furnace operations stopped 18 times from August of 1966 to 1967, thus affecting production and eventually iron ore export.

The culprit causing the block formation boiled down to the quality of iron ore being fed into the concentrator plant.

The report said that iron ore from underground mine was the main source of concentrator feed, which contained high concentration of sulfur.

Meanwhile, to complement the volume of iron ore being fed into the concentrator, PIM outsourced its raw materials from Paracale’s iron ore mining district comprising four adjacent barrios, namely Calaburnay, Dagang, Pinagbirayang Munti and Pinagbirayang Malaki.

The scheme has spawned a small-scale iron ore mining operations that provided a source of livelihood to many locals, who were extracting the mineral using picks and shovels.

PIM engaged several trucking contractors to haul off the mined iron ores from the four barrios, a spin-off that provided regular jobs to many in Larap and in Mambulao.

These haulers - all based inside the mining camp – made about 20 trips a day.

The report said that due to the unstable operation of the Calambayungan pelletizing plant, the financial condition of PIM was seriously affected.

This resulted to delayed amortization payment to Kawasaki Dock Yard, which supplied the equipment and technical expertise to the plant.

After 18 months of erratic operation, PIM proposed to KSC that it (PIM) will continue the operations of the concentrator plant at the mining camp while KSC shall take over the operations of the pelletizing plant.

In effect, KSC will buy back and operate the facility.

This gave birth to the Pellet Corporation of the Philippines (PCP) on June 30, 1967, with KSC owning 90% of the company and PIM, 10%.

Under the deal, KSC will buy pelletizing plant and iron concentrate from PIM, operate the plant and export the product to Japan.

At the same time, all debts of PIM with Kawasaki Dock Yard were assumed by PCP.

The PCP management was handled by its Japanese staff of its Manila head office and all the local staff and workers were loaned from PIM, which was then winding up its operations.

But the problems created by the fluctuation of sulfur contents in the pellet feed had not been solved.

In 1974, after the completion of seven-year contract with KSC, PIM planned to shift to the production of copper concentrate as main product.

Under the scheme, PIM expected to product 240,000 ton/per year pellet feed as by product of copper production. And the miner wanted to export it to KSC after being pelletized.

But the plan was frustrated with the flooding of the underground mine, caused by water leaks form the main open pit. This aborted the copper project.

With the crashing plunge of the peso against the US dollar, from P4-6.50 to P40 in early 1970s, thus lowering the value of its export drastically, PIM had no option but to fold up and go home.

In 1974, PIM officially ceased operations but the processing of the iron ore stockpile went on until it was completely exhausted.

Meanwhile, in 1977, KSC established at sinter plant on the outskirts of Cagayan de Oro in northern Mindanao under the Pellet Corporation of the Philippines (PCP, to receive iron ore shipment from Australia and Brazil, for transshipment to Japan.

Up to now, after 36 years of operation, the sinter produced at the PSC on Cagayan de Oro has continued to be exported mainly to Japan.

The report noted that the experience of KSC with the Larap pelletizing plant project resulted in many benefits and assisted KSC in the implementation of future overseas projects.

With this, the Philippines had taken pride in having PSC as the country’s biggest foreign investment at the time.

On the other hand, for the people of Larap, the shutdown of PIM was the end of a big barrio fiesta celebration, which had become the biggest event in Mambulao, a spectacle that drew many from all over the province of CamNorte.

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