Improved PH nickel mining seen this year

Credit to Author: EIREENE JAIREE GOMEZ| Date: Wed, 04 Sep 2019 16:24:46 +0000

Following years of decline, the country’s nickel mining industry may improve in 2019 as suspended mining firms are expected to resume operations, an international research group said.

“We expect the Philippine nickel mining sector to see improved growth in 2019 on the back of restarting nickel operations and gains at current operations,” Fitch Solutions’ Philippine nickel mining outlook said.

The sector has seen declining production over the past years as a result of ore-grade declines and the Department of Environment and Natural Resources’ (DENR) banning and suspension of openpit mining in the country. Total nickel mine output tremendously dropped from 554,000 metric tons (MT) in 2015 to 340,000 MT in 2018, according to United States Geological Survey.

“As mines begin to restart over 2019 we believe there is room for an aggregate increase in production when factoring in the increased production at current operations already,” Fitch Solutions said.

In particular, Fitch Solutions said Nickel Asia, the biggest nickel producer in the country, will remain the driver of nickel production in the Philippines. This, as the mining firm saw an increase in ore sale volume by 2.1 percent in its Cagdianao and Hinatuan mines, offsetting declines at its other operations in the first half of 2019.

The macro research firm, however, maintained its subdued nickel mining outlook for the Philippines due to “stringent environmental regulations and policy uncertainty” that could results in mine closures. While some mines have received clearance from the DENR to reopen this year, a number of mining operations, including nickel, have been ordered to shutdown due to environmental concerns, Fitch Solutions said.

For instance, the DMCI’s subsidiary Zambales Diversified Metals Corp. still awaiting the decision from the DENR to resume operations despite the firm stating it has met the necessary requirements to do so.

“We expect the country’s path of increasingly strict policies towards miners to undermine investment potential into projects from new players, thus keeping growth subdued,” Fitch Solutions said.

Moreover, it noted that declining ore grades at mines will continue to strain the industry’s growth, citing the year-end closure of mid-size miner SR Languyan Mining Corp.

Despite this, Fitch Solutions said Indonesia’s recent announcement of planned nickel ore export ban from 2020 to 2022 will likely increase demand for Philippine nickel ore, creating opportunity for nickel miners here “to alleviate the impending supply shortfall in Indonesia.”

“This sudden increase in demand could lead to an acceleration of nickel mine development and increased investment into current operational projects, aimed at increasing production in 2020.,” it added.

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