• Tight ore supply seen by Global Ferronickel

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    THE supply of nickel ore will remain tight in 2016, as nickel miners in the Philippines cut their production in the face of low nickel ore prices in the world market.

    Some nickel mines in the country have been shut down while other larger producers have gone on limited operations, said Joseph C. Sy, chairman of listed Global Ferronickel Holdings Inc.

    The scarce supply of nickel this year will continue in 2016, said Sy, noting the possibility of an even tighter supply situation as mining operations have ceased.

    He cited the case of Global Ferronickel this year saying importations to China of low grade ore “have dropped significantly… owing to the lack of supply brought about by the very low prices of iron ore.”

    Before the company reduced its shipments, the Global Ferronickel was allotting 50 percent of its low grade ores to China.

    The supply of medium grade nickel ores also was also tight because of depressed prices.

    The Global Ferronickel executive noted that if nickel price continues to stay below $10,000 per ton on the London Metals Exchange, medium grade ore “would likely fall below $20 per wet metric ton (WMT)” in 2016.

    “In that case, more nickel miners would not survive, as some of them have operating costs beyond $20 per wet metric ton because of longer hauling distances. High grade ores will continue to be scarce as this represent only about 15 percent of Philippine nickel exports,” Sy said in a statement.

    “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,” he added.

    Sy predicted some smelters in China would be forced to shut down or continue to significantly reduce production amid the scarce supply of ore from the Philippines, which is a major source of nickel for China.

    Global Ferronickel is the third largest nickel miner in the Philippines, which exports 90 percent of its output to China and the rest to Australia.

    Given the low metals prices, the company earlier said it is stockpiling low grade ore material and classifying them as waste at present. Should prices recover, the material would again be reclassified as ore and made available for sale.

    Last August, the firm acquired 90 percent of the 2,835 hectare Ipilan mine in Palawan after buying Southern Palawan Nickel Ventures Inc. for $50 million.

    This will give the firm an additional 3 million WMT of medium to high grade nickel yearly and increase annual production by approximately 50 percent. Ipilan mine will start operating in 2016.

    The company also has 4,376 hectares of reserves in its CASA Surigao del Norte mine, of which only 217 hectares have been exploited to date.

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