Nickel ore shipments by the country’s major nickel producer Nickel Asia Corp. (NAC) rose 40 percent in the first half of 2014 from a year earlier, with increased local production and tight global supply due to Indonesia’s ore export ban helping push the Philippines’ export prices higher.
In a disclosure to the Philippine Stock Exchange, NAC said ore shipments from the company’s four operating mines increased to 7.73 million wet metric tons (WMT) in January to June from 5.54 million WMT in the first half of 2013.
The estimated value of this year’s six-month shipments stood at P8.9 bilion, indicating a 117 percent jump from P4.1 billion reported a year earlier.
NAC said the shipment volume increased on the back of higher ore deliveries to its high-pressure acid leach (HPAL) process plants—particularly in Taganito HPAL facility, which is now in its first full year of commercial operations.
“We are delighted by the strong performance of our Company during this first half, and in particular the increase in prices of our various ore products,” Gerard Brimo, president and chief executive of NAC, said in the filing on Tuesday.
“We are likewise very pleased by the performance of the new Taganito plant, where we have 22.5 percent equity and which achieved approximately 80 percent capacity in the first half of this year,” Brimo added.
As a result, total ore deliveries to the two HPAL facilities reached 3.62 million WMT in the six-month period of 2014, compared with 1.64 million WMT a year earlier, when the Taganito processing plant was in a pre-operating stage.
Benchmarked to China prices
Brimo said tight supply of nickel ore brought about by the Indonesian ore export ban has led to a surge in the prices of ore to Chinese customers, most notably during the second quarter of the year, when the increase was significantly higher than that seen in LME prices.
“As a result, effective last April, all ore sales to our Japanese customers are now benchmarked to China prices on the basis of a negotiated price per WMT of ore,” he said.
The average price received for ore sales to Japanese and Chinese customers totaling 4.11 million WMT of both saprolite and limonite ore during this first half amounted to $41.18 per WMT. This compares with an average $21.62 per WMT for the same period last year on a total of 3.90 million WMT of ore sold.
The pricing of shipments to Japanese customers for the first half of last year and the first quarter of this year, which were primarily linked to the LME, were converted to the US dollar equivalent per WMT for comparison purposes.
With respect to low-grade limonite ore sold to both the Coral Bay and Taganito plants, which remain linked to LME prices, the company said it realized an average of $7.56 per pound of payable nickel on 3.62 million WMT sold during this first half. This compares with an average price of $7.30 per pound of payable nickel on 1.64 million WMT sold during the same period last year.
On a per mine basis, NAC’s Taganito operations became the largest, accounting for 42 percent of the total shipments during the first half of the year. The mine delivered a total of 950,000 WMT of saprolite ore and 2.34 million WMT of limonite ore—including 1.96 million WMT of limonite to the new plant.
From the Rio Tuba mine came 38 percent of the total shipments in January to June 2014. The mine shipped 1.04 million WMT of saprolite ore and 1.94 million WMT of limonite ore – including the 1.66 million WMT to the adjacent Coral Bay plant.
The company’s two other operating mines, Hinatuan and Cagdianao, commenced shipments in April and May, respectively, following the end of the wet season. The Hinatuan mine shipped a total of 1.09 million WMT of limonite ore and 51,000 WMT of saprolite ore, while the Cagdianao mine shipped a total of 110,000 WMT of limonite ore and 212,000 WMT of saprolite ore.