PHL nickel industry to benefit from Indonesia’s export ban

Philippine nickel ore production is expected to register a “modest” improvement following Indonesia’s nickel ore export ban, Fitch Solutions Macro Research said Wednesday.

In a commentary sent to reporters, Fitch Solutions said the Philippines will benefit from Indonesia’s September 2 announcement to ban nickel ore exports starting January 1, 2020, earlier than the originally scheduled 2022.

“We highlight that a recent decision by the Indonesian government to bring forward a nickel ore export ban will pose upside risks to lackluster nickel production forecasts in the Philippines,” it said.

“This has created an opportunity for Philippine nickel miners to alleviate the impending supply shortfall in Indonesia—the largest nickel producer globally.”

According to Fitch Solutions, nickel smelters in China, which currently import majority of their ore from Indonesia, will likely look to the Philippines as an alternative supply source.

“This sudden increase in demand could lead to an acceleration of nickel mine development and increased investment into current operational projects, aimed at increasing production in 2020,” it said.

In June, Philippine Nickel Industry Association (PNIA) president Dante Bravo said the industry sees a wide area of engagement with the government’s ambitious infrastructure spending program. “With the tremendous growth projected in the infrastructure sector brought about by the government’s Build, Build, Build program, we see a wide area of engagement.”

In the same commentary, Fitch Solutions sees better prospects of near-term growth as nickel mines restart operations.

“We expect the Philippine nickel mining sector to see improved growth in 2019 on the back of restarting nickel operations and gains at current operations,” it said.

“As mines begin to restart over 2019, we believe there is room for an aggregate increase in production when factoring in the increased production at current operations already.”

After an audit of mines across the country in 2018, the government has allowed operations to resume for companies that passed the set standards.

Citing data from the Mines and Geosciences Bureau (MGB), Fitch Solutions noted that nickel production grew by 2.5% in the first quarter of the year to 2.9 million dry metric tons.

This led to an 11.7% increase in nickel content to 38.1 metric kilotons (Kt) from 34.1 Kt a year earlier. —VDS, GMA News