Posted on August 19, 2016
TOE the line. That’s the call from the mining
association in the world’s biggest nickel ore supplier where members are facing
a crackdown led by Philippine President Rodrigo R. Duterte, who’s said the
Southeast Asian nation can live without the industry’s contribution entirely if
need be.
Members are being urged to “walk the
walk” as far as environmental compliance is concerned, according to Ronald Recidoro,
vice-president for legal and policy at the Chamber of Mines of the Philippines.
“As a professional association, that’s basically what we can do,” Mr. Recidoro
said in an interview.
Nickel has climbed after the nationwide audit began last month, with prices rallying to the highest in a year as some mines have been suspended. The interruptions to supply -- as well as the potential for more dislocation -- have boosted the bullish case for the metal, with Goldman Sachs Group, Inc. and UBS Group AG seeing scope for gains. Most of the cargoes from the Philippines, which accounts for about 20% of global mined supply, are sold to buyers in China to feed the nation’s stainless-steel industry.
“Pricing will depend on Chinese demand, especially given their slowing economy,” Mr. Recidoro said. “Prices will also depend on how buyers perceive the impact of the latest suspensions in the Philippines and the environment department’s decision not to issue any new permits.”
PRICE GAINS
Nickel traded at $10,205 a metric ton on the London Metal Exchange at 3:51 p.m. in Singapore, after falling on Tuesday to the lowest close in five weeks as the Philippines’ Department of Environment and Natural Resources said the checkup would be finished by the end of the month. Prices are still 16% higher in 2016 after sinking 42% last year.
Mr. Duterte, who took office on June 30, and Environment Secretary Regina Paz L. Lopez want to ensure that all mines comply with environmental and welfare standards, and so far eight nickel ore mines have been suspended. UBS estimated that these accounted for about 10% of the country’s nickel output, or 2% of worldwide supply, according to an Aug. 12 report.
The future of the Philippine mining industry will depend on the audit, which will be fair and transparent, Leo L. Jasareno, environment undersecretary, told reporters in Manila on Wednesday. The Duterte administration has had a paradigm shift on mining, and the challenge for the industry is to show that it’s still relevant for development, Mr. Jasareno said, adding that stop orders against small-scale miners were being issued on a weekly basis.
LOCAL PROCESSING
The chamber -- which has more than 20 members, at least one of which, Berong Nickel Corp., has been suspended -- is also raising concerns about a proposal to ban ore shipments entirely, in favor of mandatory local processing. Speaker of the House of Representatives Pantaleon D. Alvarez backed the move in his inaugural address in July.
“There is no problem with developing our industries but we need enormous capital,” said Nelia C. Halcon, executive vice-president at the chamber. “I don’t think banning nickel-ore exports can be a step toward immediately building smelters and refineries. This has to be planned and programmed and there has to be a feasibility study that can be packaged and promoted to investors.”
UBS has forecast nickel will rally, describing the metal as one of its most-preferred commodities amid projections for rising demand and a shift to global deficits. The impact of the Philippine crackdown may become apparent only next year should exports fail to pick back up after a seasonal lull, it said.
Jinchuan Group, China’s biggest producer of the refined metal, is also bullish on nickel. Tightening global supplies because of the clampdown in the Philippines and rising demand from the stainless-steel industry in China will push prices higher, according to Chairman Yang Zhiqiang. -- Bloomberg
Nickel has climbed after the nationwide audit began last month, with prices rallying to the highest in a year as some mines have been suspended. The interruptions to supply -- as well as the potential for more dislocation -- have boosted the bullish case for the metal, with Goldman Sachs Group, Inc. and UBS Group AG seeing scope for gains. Most of the cargoes from the Philippines, which accounts for about 20% of global mined supply, are sold to buyers in China to feed the nation’s stainless-steel industry.
“Pricing will depend on Chinese demand, especially given their slowing economy,” Mr. Recidoro said. “Prices will also depend on how buyers perceive the impact of the latest suspensions in the Philippines and the environment department’s decision not to issue any new permits.”
PRICE GAINS
Nickel traded at $10,205 a metric ton on the London Metal Exchange at 3:51 p.m. in Singapore, after falling on Tuesday to the lowest close in five weeks as the Philippines’ Department of Environment and Natural Resources said the checkup would be finished by the end of the month. Prices are still 16% higher in 2016 after sinking 42% last year.
Mr. Duterte, who took office on June 30, and Environment Secretary Regina Paz L. Lopez want to ensure that all mines comply with environmental and welfare standards, and so far eight nickel ore mines have been suspended. UBS estimated that these accounted for about 10% of the country’s nickel output, or 2% of worldwide supply, according to an Aug. 12 report.
The future of the Philippine mining industry will depend on the audit, which will be fair and transparent, Leo L. Jasareno, environment undersecretary, told reporters in Manila on Wednesday. The Duterte administration has had a paradigm shift on mining, and the challenge for the industry is to show that it’s still relevant for development, Mr. Jasareno said, adding that stop orders against small-scale miners were being issued on a weekly basis.
LOCAL PROCESSING
The chamber -- which has more than 20 members, at least one of which, Berong Nickel Corp., has been suspended -- is also raising concerns about a proposal to ban ore shipments entirely, in favor of mandatory local processing. Speaker of the House of Representatives Pantaleon D. Alvarez backed the move in his inaugural address in July.
“There is no problem with developing our industries but we need enormous capital,” said Nelia C. Halcon, executive vice-president at the chamber. “I don’t think banning nickel-ore exports can be a step toward immediately building smelters and refineries. This has to be planned and programmed and there has to be a feasibility study that can be packaged and promoted to investors.”
UBS has forecast nickel will rally, describing the metal as one of its most-preferred commodities amid projections for rising demand and a shift to global deficits. The impact of the Philippine crackdown may become apparent only next year should exports fail to pick back up after a seasonal lull, it said.
Jinchuan Group, China’s biggest producer of the refined metal, is also bullish on nickel. Tightening global supplies because of the clampdown in the Philippines and rising demand from the stainless-steel industry in China will push prices higher, according to Chairman Yang Zhiqiang. -- Bloomberg
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