By: Ronnel W. Domingo 01:10 AM October 1st, 2016
The clampdown on mining
firms that allegedly violate laws that protect the environment is expected to
have a minimal impact on nickel output this year while publicly listed mining
companies that were allowed to continue operations appear to have benefited
from the government move.
Global Ferronickel
Holdings Inc. (FNI), the country’s second-largest producer of nickel,
maintained its forecast reduction in nickel output this year at about 30
percent despite the recommended suspension of 15 more mines.
The Department of
Environment and Natural Resources on Tuesday said these mining companies were
cited for various violations including siltation of bodies of water,
contaminating farmlands and fishponds, and the opposition of local governments
and civil society groups to concerned mining projects.
Before the audit was
conducted, the DENR had suspended the operations of four nickel mines in Zambales.
Altogether, the nickel
mines affected by the audit represent 56 percent of the domestic output
in 2015.
“[But] the effect of
the audit on nickel production will be minimal, at least for 2016, since the
mining season in the Caraga region runs from April to October and is
practically over for this year,” FNI president Dante R. Bravo said in an
interview.
“The expected reduction
in output this year will still be largely due to miners holding back production
amid relatively low prices,” Bravo said, adding that things could worsen next
year if the suspension of the mines push through.
Even then, publicly
listed mining companies appear to have gained from the audit results,
especially those whose operations are not recommended for suspension.
“The mining and oil
sub-index (at the Philippine Stock Exchange) went up by as much as about 200
points (on Wednesday trading),” said Astro del Castillo, managing director at
fund management firm First Grade Finance.
“Apparently, listed
mine operators that passed the audit took the glitter [and] benefited from the
rise in global prices,” Del Castillo said.
At the London Metal
Exchange, refined nickel fetched a six-week high of $10,755 per ton for cash
buyers, the highest since Aug. 10.
At the PSE, mining and
oil was the best-performing sub-index on Wednesday with a 2.18-percent gain
after falling 2.44 percent on Tuesday when the audit results were announced.
“NIKL [Nickel Asia
Corp.] carried the day,” said Jomar Lacson, deputy head of research at BPI
Securities Corp.
Earlier, Nickel Asia
told the PSE that while the DENR recommended the suspension of Hinatuan Mining
Corp.’s operations, its three other mines passed the audit.
Nickel Asia said
Taganito Mining Corp., Rio Tuba Nickel Mining Corp. and Cagdianao Mining Corp.
accounted for about 85 percent of the group’s earnings from mining operations
in 2015.
“I suspect that the
results of the audit are not yet fully factored in and it might take some time
before foreign investors (show signs of the audit’s) impact,” Lacson said.
“Or, with the
uncertainty of the audit results no longer there, mining stocks are now free to
go up,” he added. “At the end of the day, even if we say that nickel mines
suffered from the audit, those that are still in operation might benefit from
the supply situation.”
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