Nickel Advances on Supply Concerns as Mining Shares Surge

  • The Philippines may halt more nickel mines after audit
  • Glencore, Norilsk Nickel, Rio Tinto shares are rising

Nickel jumped the most in two months after the Philippines said it may suspend more mines as part of a nationwide audit that’s due for release this week. Glencore Plc and other mining shares also advanced.

Nickel has climbed 15 percent in 2016 as the Philippines shutters sites for failing to meet environmental standards, threatening supplies from the nation, the top supplier of the mined metal. The government could tell more mines to stop operating, Environment and Natural Resources Secretary Gina Lopez said in an interview with Bloomberg on Monday after similar comments to Reuters.

"As much as 150,000 tons of nickel, or 8 percent of global supply, could be at risk of closure," Anton Berlin, head of analysis and market development in Moscow at GMK Norilsk Nickel PJSC, one of the two largest producers of the metal, said by e-mail on Monday.

Nickel for delivery in three months jumped 4.4 percent to settle at $10,150 a metric ton on the London Metal Exchange at 5:50 p.m. in London, marking the biggest gain since July 12. The commodity lost 6.2 percent last week, the most since November, after the Philippines postponed the announcement of its audit result.

The closure of 10 more mines is possible, Lopez said Monday. A final planning session to confirm the results of the audit and plan further action will be held Wednesday, she said.

Raising the Bar

As the global nickel market awaits the full results of the probe, policy makers in the country have repeatedly signaled that more action is possible, with Lopez saying on Friday that the Philippines will raise the bar on standards for miners. The nation accounts for about a fifth of mined supply.

HSBC Holdings Plc said in a Sept. 15 report that it expects nickel prices to rise in 2017 and 2018, to $10,750 and $12,600 a ton, respectively.

A gauge of 18 mining companies tracked by Bloomberg Intelligence gained 1.4 percent, heading for the biggest gain in in almost two weeks. Glencore, which was raised to outperform by Credit Suisse on Monday due to higher coal prices, advanced as much as 6.2 percent to the highest in a month, while Rio Tinto Plc rose 3.5 percent in London. Moscow-based Norilsk Nickel added as much as 1.1 percent.

Copper fell from the highest in almost a month as Anglo American restarted operations at a mine in Chile after a strike. The metal also declined as data on Monday showed copper output in August jumped in China. Fixed-asset investment and auto output in the Asian nation are among indicators suggesting that copper could rally again, Barclays Plc analysts said in an e-mailed note.

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