Oct 4, 2017 | Gulf Times
Nickel ore shipments from the Philippines may tumble by almost a third this year on the lingering effect of an environmental crackdown in the world’s top shipper, although volumes will pick up in 2018 and help meet a global deficit, according to the head of one of the biggest producers.
A decline of 20 to 30% is possible as some mines have yet to reopen, and as labour problems in the southern Philippines have hurt output, Global Ferronickel Holdings president Dante Bravo said in an interview. In 2016, volumes fell 23% to 24.7mn dry metric tonnes, official data show.
The global nickel market is tracking shifts in Philippine exports following a change of regulator, with firebrand environmental campaigner Gina Lopez – who’d closed mines and shaken up the industry – replaced in May by former Armed Forces chief-of-staff Roy Cimatu. Prices of the stainless steel ingredient have risen since the start of the year even as Philippine rival Indonesia restarted shipments of raw ore, adding to supplies after a policy flipflop.
“From great discomfort, there’s now a little bit of comfort at this point because the new secretary is not the same as Gina Lopez,” Bravo said in Makati City on October 2.
Lopez’s suspensions had a huge impact on nationwide output, and while Cimatu has yet to revoke any of her orders, he’s widely expected to “enforce the law and follow contracts,” he said.
Three-month nickel rose 1.1% to $10,735 a tonne on the London Metal Exchange yesterday, up 7.1% this year, but still a fraction of the highs above $50,000 seen in 2007.
In early September, it hit $12,380, a two-year high, before easing amid expectations for the extra Indonesian supply.
“Prices will slowly inch up to $11,000 per tonne of contained nickel by the end of the year and probably trade between $11,000 and $12,000 next year as the deficit widens,” Bravo said.
While most shuttered Philippine mines will probably resume operations in 2018, strong demand from China, as well as requirements for electric vehicles, will support consumption, he said.
Morgan Stanley forecasts a broader market deficit for nickel that will reduce a long-standing inventory overhang, according to a report dated October 2, which played down the long- term demand boost that may come from EVs.
In a separate note last month, the bank said it was neutral on the metal, while projecting shortfalls each year through to 2021.
Cimatu, who was confirmed as environment secretary by lawmakers on Wednesday, has said an interagency mining council will review Lopez’s shutdown and suspension orders from the end of October, with completion likely by the year-end.
Seven suspended mines and four more that halted operations out of the total of 28 nickel mines, had combined output of 5.25mn dry tonnes in 2014, government data show.
Global Ferronickel’s Bravo had to contend with the threat of suspensions too after unit Platinum Group Metals Corp was listed in a closure notice issued by Lopez in early 2017, only for it to be removed a few weeks later.
This year, volumes exported have increased and there’s been a return to profitability. The company’s shares climbed as much as 3.2% in Manila yesterday.
Exports hit 1.9mn wet tons in the first half, up 76% from a year ago, when the miner cut output because of lower prices and more frequent rains. Net income was 148.8mn pesos ($2.9mn) in the January-to-June period from a loss a year ago, as production and prices rose.
So far this year, the company – which sends all its production to buyers in China – has shipped 90 vessels, compared with 77 shipments in all of 2016, according to Bravo. “This year, we will recover,” Bravo said, adding that this will be sustained into 2018.
