MANILA, Philippines?An environmental group on Friday assailed the mining contracts bagged by two Philippine companies, headed by President Gloria Macapagal-Arroyo's former chief of staff Michael Defensor, and called for a congressional inquiry into these.

?The Defensor-Chinese mining deal stinks to high heavens,? Kalikasan-People's Network for the Environment national coordinator Clemente Bautista said in a statement.

?That Michael Defensor is getting a lot of favor from the Arroyo administration is revolting.?

Nihao Mineral Resources Int'l and Geograce Philippines, both chaired by Defensor, signed a memorandum of agreement with China's Jiangxi Rare Earth and Rare Metals Tungsten Group Co. to explore nickel and put up a $150-million nickel plant in Zambales.

The President, who flew to Beijing to attend the Olympics Games opening, witnessed the MOA signing.

Kalikasan said it was baffled how a small mining firm like Geograce could forge a multi-million-dollar deal with big firms.

It said that in the first quarter, Geograce incurred a net loss of P17.18 million due to exploration costs, professional fees, salaries and rent and utilities expenses, among others.

Geograce has a claim to 142,376 hectares of mineral lands, the group said.

``It is baffling how a small mining company and without track record in the mining industry like Geograce could get multimillion mining deals with big foreign mining companies and how these mining companies of Mike Defensor were given hundreds of thousands of hectares of mineral lands by the Arroyo government,? Bautista said.

The background and operation of Defensor's companies should be investigated by the Senate and the House of Representatives, he said.

``The presence of high government officials and their relatives in these mining transactions could be a sign that the Arroyo administration and its cronies are making profit out of the country's mineral resources without being mindful if these projects would be beneficial to community or not,? he said.

Under the MOA, the three companies would form a strategic partnership to jointly explore and develop the Zambales mining holdings covering a total of 35,496.6 hectares, which are directly or indirectly held by Nihao and Geograce.

The INQUIRER tried but failed to reach Director Horacio Ramos of the Mines and Geosciences Bureau for comment.

Bautista said that Defensor's closeness to the President could explain how ``his mediocre companies were very 'lucky' in getting several mining concessions and lucrative mining deals.?

In June this year, Defensor's companies obtained small-scale mining permits from the Zambales provincial government a month after the governor canceled all ``regulatory approvals,? he said, citing news reports.

Geograce also forged mining agreements with the Brazilian-owned Vale, Masbate 13 Philippines, Nickelodeon Mines and Ophiolite Mines.

``There is something wrong with the picture of GMA (Arroyo) overseeing an agreement between a once notorious DENR Secretary currently affiliated with a small mining company and a large mining company,? Bautista said.

``It seems that the present government is selling the country's patrimony to foreign companies but not without ensuring that local allies also get a huge share of the plunder," he added.