Nickel into dimes: Regional demand drives expansion of domestic output

While the nickel rush brought about by the commodity price spike in 2006-08 has largely subsided, nickel mining remains by far the largest metallic commodity by weight and value produced in the Philippines.

EXTRACTION: Through the first half of 2011 nickel mines extracted 5.2m dry tonnes (DT) of ore worth P5.37bn ($121.9m), according to data from the Chamber of Mines of the Philippines. This was 8% less than the 5.68m tonnes produced over the same period in 2010, with a corresponding 9% dip in value to P5.92bn ($134.4m). For 2010, nickel exports worth $276.42m free on board (FOB) accounted for 89.06% of the total value of mineral exports, according to data from the Philippine Board of Investments.

After spiking above $50,000 per tonne in mid-2007, nickel commodities as listed on the London Metal Exchange (LME) plummeted to under $10,000 per tonne by the end of 2008 with the global recession before rebounding to nearly $28,000 per tonne in the first half of 2010. As of early 2012, prices on the LME were just under $20,000 per tonne.

“Currently, the return on investment in the Philippines continues to be simply too high to ignore, so companies continue to invest in the country,” Ian Moller, the country manager of mining firm ENK Philippines, told OBG. “Growth in the regional mining industry is being fuelled by demand from China and India, and that growth trend is expected to continue for years to come.”

MAJOR PRODUCERS: The Philippines’ largest single producer of lateritic nickel ore is Nickel Asia Corporation (NAC), which owns majority stakes in four active nickel mining operations. The Rio Tuba mine in southern Palawan produced 708,326 DT of ore worth P797.99m ($18.1m) through the first half of 2011, down 11% by weight over the same period in 2010. In the first six month of 2011, NAC’s Cagdianao, Taganaan and Claver nickel projects produced 32,918 DT worth P41.46m ($941,142), 653,156 DT valued at P499.74m ($11.3m) and 269,354 DT valued at P951.24m ($21.6m), respectively. Through the first nine months of 2011, NAC net profits jumped 131% to P3.26bn ($74m) as a result of higher nickel prices.

Other significant producers operating mines in the Philippines include the CTP Construction and Mining Company, which runs the Adlay Nickel mine. Adlay produced 1.23m DT of ore in the first six months of 2011 worth P985.59m ($22.4m), down 5% from 1.28m DT in the same time period in 2010.

FURTHER DIGS: London-listed ENK achieved its first production from its new Acoje nickel project, located 250 km south of Manila, in October 2011. According to the pre-feasibility study, the project will have an annual production capability of 24,500 tonnes of contained nickel ore and 930 tonnes of contained cobalt in mixed hydroxide product over an initial 10-year span. ENK estimates total combined deposits of Adlay and the adjacent Zambales project also controlled by the firm, at 840,000 contained tonnes of nickel.

Further capacity expansion is also on the cards as a number of new nickel projects are already in various stages of developments. Japan’s Sumitomo Metal Mining is moving forward with its $1.3bn Taganito nickel mining project in Surigao del Norte. Projected to start operations by August 2013, the mine’s initial output is expected to be 30,000 tonnes of nickel ore per year for at least 20 years, with the possibility of expansion of up to 45,000 tonnes per year. Operations at the Infanta nickel mine locate at Brooke’s Point in Palawan are also set resume by the second quarter of 2012 after a decade-long hiatus. Mining outfit Macro Asia acquired an exploration permit to re-evaluate the 1114-ha site in 2005, which was last utilised in the 1970s.

Norway’s Intex Resources is also in advance developmental stages for its $498m Mindoro Nickel project located on Mindanao. According to a feasibility study, the firm will mine 100-150 ha per year and will have the capability to process up to 52,700 tonnes of LME-grade nickel, in addition to 15,920 tonnes of cobalt salt, 74,100 tonnes of metallurgical grade chromite and 147,100 tonnes of ammonium sulphate fertiliser.