GLOBAL Ferronickel Holdings Inc. on Monday said its net income fell sharply last year due to a drastic drop in nickel ore prices and lower shipments.
In a disclosure to the Philippine Stock Exchange (PSE), the mining company said its net income last year fell to P1.1 billion from P4.8 billion in 2014.
The miner said heavy rainfall in June and August affected ship loading activities, which reduced the number of shipments from 117 to just 99 vessels during the period.
“Our operations encountered unusually heavy rainfall during the months of June and August that affected ship loading activities due to the need to reduce moisture content to the desired level of 33 percent,” the company said.
In addition, it said the decrease in shipment volume was exacerbated by the decline in nickel ore prices.
It noted that from the 2014 average of $43.30 per wet metric ton (WMT), average nickel ore prices 38.4 percent fell to $26.69 per WMT last year.
Total volume exported last year stood at 5.35 million WMT, a 15 percent drop from the 6.3 million WMT exported in 2014, it said.
However, it said the volume of high-grade and medium-grade was higher by 288 percent and by 83 percent, respectively, while the low-grade ore exported was lower by 84 percent.
Total ore export revenues reached $142.94 million last year from $272.78 million in 2014.
“The shift in mining strategy was disclosed in the third quarter of last year, discussion of results with the exposure of the middle grade ore which was higher than previously explored and this helped mitigate the low nickel ore prices,” the mining company said.
Cost of sales decreased 9.1 percent to P3.4 billion in spite of the 15 percent drop in production volume, the miner said.
The company said 2015 was “very challenging” as commodity prices fell to decade lows.
“In spite of this, the Company has managed to become the second largest nickel ore producer,” it said.
“For 2016, we will implement cost-cutting measures to decrease our cost due to low fuel prices,” the miner said, adding that its exploration efforts in Surigao are bearing fruit and that it expects the results to be out by the end of the second quarter this year.