Mining Sector Sees Tighter Supply of Nickel Ore in 2016

Amid the current low prices of nickel ore, some nickel miners in the Philippines have shut down their operations, while others are reducing significantly their production.

This sector said this scenario will likely continue in 2016.

According to Joseph C. Sy, director of Philippine Chamber of Commerce Inc. and Chairman of Global Ferronickel Holdings Inc., a leading nickel miner in the Philippines, since the Indonesian export ban in January 2014, the country supplied more than 90 percent of the nickel ore imports of China.

However, more than 50 percent of said imports are low grade ores.

Compared to last year, importations by China of low grade ores have dropped significantly this year owing to the lack of supply brought about by the very low prices of iron ore.

There was also a tight supply of medium grade ores this year because of low nickel prices.

If LME nickel price will continue to hover below USD 10,000 per ton, Sy predicts that the price of medium grade ore would likely fall below USD 20 per wet metric ton.

In that case, more nickel miners would not survive as some of them have operating costs beyond USD 20 per wet metric ton because of longer hauling distances.

High grade ores will continue to be scarce as this represents only about 15 percent of Philippine nickel exports.

The price of the same is also relatively low and there is no practical advantage of buying high grade ores from the Philippines as it is relatively cheaper to process medium grade ores.

Given a tighter supply of nickel ore from the Philippines, some smelters in China would also be forced to shut down or continue to reduce significantly their production. (PNA) SCS/LGI