Philippine Nickel - Philippine Nickel Giant Expects Steady Sales in 2019

Nickle Asia Corp., the largest nickel ore miner in the Philippines, has recently given a forecast for its 2019 ore sales, with shipments in the year to be unchanged from 2018, although the company plans to boost its domestic sales to expand revenues, its chief financial officer said.

Nickel Asia contributes about half of the nickel ore production in the world’s second biggest supplier of the valuable mineral. China and Japan are the top two buyers of its ores, which are processed for making stainless steel and for use in battery components.

In contrast, global top nickel producer Indonesia has been arranging more shipments to China after removing a ban on metal exports in 2017, with Chinese buyers tend to buy the Indonesian ore of higher grade, said Emmanuel Samson, senior vice-president and CFO with Nickel Asia.

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To compensate for the loss of market share in China, Nickel Asia will ramp up shipments to two Philippine smelters at Coral Bay and Taganito, Samson said.

“As long as Indonesia continues to export ore to China, it’s going to be a very challenging period for Philippine miners,” he said, adding that Nickel’s ore sales for this year will likely be around 19.3 million wet tonnes, flat with that registered in 2018.

The company, which runs four of the country’s 30 nickel mines, had seen its net income growing 9 percent last year to 3.01 billion Philippine pesos (S$77 million), from 2.77 billion in 2017, benefiting largely from higher London Metal Exchange (LME) nickel prices averaging US$5.95 per pound on sales to the two domestic processing plants.

On the other hand, shipments of unprocessed ore output to China last year rose to 11.54 million wet tonnes from 9.64 million in 2017, accounting for 60 percent of the company’s total sales, although the average price fell to US$21.53 per wet tonne from US$24.42 in the year before.

Last year, LME nickel-associated deliveries to the two Philippine processing plants contributed 40 percent of the sales to come to 7.81 million wet tonnes, down from 8.06 million wet tonnes a year earlier.

To derive greater profits from higher LME prices, Nickel Asia would likely boost its LME-linked domestic business to 45-50 percent, while exports to China would be cut down to 50-55 percent, Samson said.

Nickel Asia is the only Philippine nickel miner with ownership in processing plants, making it well distinguished from other local miners, who export all their unprocessed nickel ores to Chinese stainless steel manufacturers.

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