Nickel Asia ore exports hurt by lower prices

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THE country’s biggest nickel miner said on Thursday that the value of its ore exports dropped by nearly 40 percent last year as record shipment volumes failed to offset falling metal prices.

In a statement, Nickel Asia Corp. said the value of ores sold to its clients reached P14.4 billion from January to December last year, or 39.2 percent lower compared to the P23.7 billion recorded in 2014.

Gerard Brimo, NAC president and chief executive officer, said nickel prices continued to soften amid China’s slowing economy and the strong dollar.

“The year 2015 marked the seventh consecutive year of increasing production and shipment volumes,” Brimo said.


“Unfortunately, the slowdown in China’s economic growth, coupled with a strong US dollar, clobbered metal prices across the board, and in the case of nickel, resulted to a steep reversal of the strong prices we experienced in 2014,” he said.

NAC shipped a total of 19.7 million wet metric tons (WMT) in 2015, up 10 percent from the 17.9 million WMT it shipped in 2014 from its four operating mines.

Direct exports of ore increased to 11.88 million WMT in 2015 from 10.47 WMT in 2014.
The estimated realized nickel price on 11.9 million WMT of direct exports of ore in 2015 averaged $22.66 per WMT, much lower than the average of $45.10 per WMT realized in 2014.

Ore prices had surged in 2014 due to expectations of supply tightness as a result of the Indonesian export ore ban, which did not occur.

With respect to low-grade limonite ore sold to both the Coral Bay and Taganito plants, which continues to be linked to London Metal Exchange (LME) prices, the company realized an average of $5.36 per pound of payable nickel in 2015, against an average price of $7.69 per pound of payable nickel sold in the prior year.

Ore deliveries to the two high pressure acid leaching (HPAL) plants likewise rose, in particular to the Taganito HPAL facility, which just completed its first full year of operations at full capacity. The said plant was operating at an average 80 percent capacity in 2014.

Total ore deliveries to the two HPAL plants reached 7.80 million WMT in 2015 compared to 7.41 million WMT in 2014.

On a per mine basis, the Taganito operation, now the NAC’s largest, accounted for 39 percent of total shipments. The mine shipped a total of 2.50 million WMT of saprolite ore and 5.24 million WMT of limonite ore, including 4.43 million WMT of limonite to the Taganito plant.

The Rio Tuba mine accounted for 33 percent of total shipments. It shipped 3.18 million WMT of saprolite ore and 3.37 million WMT of limonite ore to the adjacent Coral Bay plant.

Hinatuan mine, on the other hand, achieved total shipments of 2.56 million WMT of limonite ore and 650,000 WMT of saprolite ore, while the Cagdianao mine shipped a total of 1.44 million WMT of limonite ore and 729,000 WMT of saprolite ore.

Despite the current low prices, Brimo said that NAC’s operations continue to be profitable.
“Our position as a low-cost producer in our mining operations will help the company ride out the challenges in the current down cycle,” he said.

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