Nickel Mines Bear Brunt as Top Shipper Intensifies CrackdownBy and
Philippines says more than 10 additional mines to be suspended
Full details of nationwide audit are set for release Sept. 26
The Philippines has deepened a crackdown on its mining industry as the world’s top nickel shipper announced it will suspend more than 10 mines in addition to 10 halts already made, saying it wants to surpass Canadian and Australian standards. Nickel producers bore the brunt.
The government is finalizing results of an environmental audit and will make recommendations on what companies should do after their suspension, Environment Secretary Gina Lopez said on Wednesday. Twelve more mines, mostly nickel, have been recommended for suspension, said Environment Undersecretary Leo Jasareno. Final details are due Monday, both officials said.
The global nickel market has zeroed in on the environmental checkup initiated by President Rodrigo Duterte amid concern that it will constrict the flow of ore to China, the largest metals market. Futures rallied in August to the highest level in a year as the early suspensions took effect, and banks including Goldman Sachs Group Inc. have flagged the potential for further advances. The country has about 40 metallic mines, of which more than half produce nickel.
“We should be much better than Canada or Australia because we’re an island,” Lopez said in Manila after repeated delays in releasing the audit’s full findings. The Philippines comprises thousands of islands, with most nickel mining found in Palawan and Surigao provinces. “More than 10 mines will be suspended.”
Most of the mines recommended for suspension are in Mindanao, Jasareno said.
In the runup to Wednesday’s comments, Secretary Lopez signaled there would probably be more suspensions, as well as state support for workers laid off. The country will close more mines including some large-scale operations after the audit, Lopez told reporters on Sept. 5. Earlier this week, she said the government could tell more mines to stop operating.
Nickel futures surged to as much as $11,030 on the London Metal Exchange last month as the audit got under way, with 16 teams fanning out across the country to check on the mines for compliance. On Wednesday, the metal pared losses, trading 0.3 percent lower at $10,275 a ton at 4 p.m. in Manila after losing 1.3 percent earlier.
Goldman Sachs has warned that further Philippine suspensions may push ore stockpiles to critically low levels. Its base-case outlook assumed a further 15 percent of Philippine supply being halted for six months, following the loss of 10 percent, according to a Sept. 12 note. The bank said refined nickel may surge to $12,000 a ton by year-end.
Mines that are suspended may reopen if they are able to fix shortcomings, according to Environment Undersecretary Leo Jasareno. The government is optimistic that the drive to clean up the industry will act as lure to stimulate investment, rather than a deterrent, Jasareno told Bloomberg.
Last year, nickel ore shipments from the Philippines totaled 32.3 million tons, down from 33.1 million tons in the year before, according to mines bureau data. Most cargoes go to China to make stainless steel, with the Southeast Asian nation accounting for about 20 percent of global mined nickel output.
Global nickel demand exceeded supply in the first half, with a deficit of 80,800 tons compared with a surplus of 45,200 tons in all of 2015, according to the World Bureau of Metal Statistics. Stockpiles in LME-tracked warehouses have fallen 17 percent to 364,782 tons this year, the lowest since October 2014.