The Market Monitor Minding the Nation's Business
By Riza Lozada
Better relations with China and the recovery of the country’s stainless industry, along with the production cutback in some nickel ore producing regions present an opportunity for the local nickel ore mining industry to cash in on improved nickel ore prices in the world markets this 2017, listed firm Nickel Asia Corp. said.
Nickel Asia reported to the bourse its four operating mines sold a total of 19.3 million wet metric tons (WMT) of nickel ore in 2016 from 19.7 million WMT a year ago.
The company reported lower shipment volumes and prices leading to a drop in estimated value of shipments from P14.4 billion in 2015 to P13.3 billion in 2016.
“The year 2016 was challenging as we saw nickel prices hit a 13-year low early in the first half, a continuation of the downtrend that we experienced in 2015”, Nickel Asia President and CEO Gerard Brimo said.
“However, prices in the second half have improved in line with improving fundamentals for nickel due to declining inventories coupled with some production cut-backs and closures, and a strong recovery in the Chinese stainless steel market.
All these suggests higher nickel prices this year”, Brimo added.
Nickel price on 11.7 million WMT of ore exported to Japan and China in 2016 was estimated at an average of $20.82 per WMT from $22.64 per WMT in 2015.
“Low-grade limonite ore sold to both the Coral Bay and Taganito processing plants, which are linked to LME prices, the Company realized an average of $4.39 per pound of payable nickel on 7.6 million WMT sold in 2016,” it said.
This compares to an average price of $5.36 per pound of payable nickel on 7.8 million WMT sold in 2015. The remedial one-month work at the Taganito plant reduced ore delivery but the completion last May resulted in the resumption of full operation.
This plant contributed 42 percent of the company’s total shipments. The mine shipped a total of 2.3 million WMT of saprolite ore and 5.7 million WMT of limonite ore, including 4.1 million WMT to the Taganito plant.
The Rio Tuba mine accounted for 32 percent of total shipments, which consists of 2.3 million WMT of saprolite ore and 3.9 million WMT of limonite ore, including 3.5 million WMT delivered to the Coral Bay plant.
The company also cited the drop in ore shipments mainly due to a change in the ore grade mix brought about by the impact of lower ore prices.
The weather and the sea swells in the first half of 2016 delayed the start of shipments from the company’s Hinatuan and Cagdianao mines.
Shipments from the Hinatuan mine amounted 3.0 million WMT in 2016 compared to 3.2 million WMT in 2015.
The Cagdianao mine shipped 2.1 million WMT in 2016 versus 2.2 million WMT in previous year.