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Miners, government outlook bleak on Philippines' role in EV metals supply chain
by Philippine Resources - April 12, 2021
Despite being the world's second-largest nickel producer, the Philippines' capacity to engage in the development of a global battery metals supply chain is severely restricted due to a shortage of facilities and stringent policies, as the country's mines bureau and mining industry both agree.
"While the Philippines is a top nickel ore producer, we only have two existing nickel/cobalt processing plants that produce nickel and cobalt sulfide concentrates — intermediate products that are further processed in Japan to make electric vehicle batteries," Rocky Dimaculangan, vice president for communications at the Philippines' Chamber of Mines, or COMP, said.
Mines and Geosciences Bureau Director Wilfredo Moncano reiterated the view of COMP, saying the Philippines "can participate in the supply of battery metals but it will be limited to the capacity of two mineral processing plants in the country put up by Sumitomo Metal Mining Co. Ltd."
"Although the country is a top supplier of nickel as export, most of these or about 70% are exported as raw, directly shipped ore and has not undergone mineral processing," Moncano said.
According to Moncano, the bureau has sent a request to Congress that would require current and new players to construct mineral processing plants that would manufacture finished and semi-finished materials. Some gold and copper mines in the United States have already built processing plants, and Moncano said the bureau hopes to see nickel and iron ore mines follow suit.
"This initiative needs legislation by Congress because MGB cannot obligate these companies to do it without a law. A resulting consequence to this one is the gradual and partial ban of raw nickel and iron ore exports as well as Congressional support for the needed infrastructure like additional electric power plants, and the reduction of power cost because it requires billion dollars to put up a medium size mineral processing plant," Moncano said, noting that electricity costs are very significant in mineral processing.
Domestic power prices are among the highest in the ASEAN region, on par with Singapore, according to the Department of Energy's Power Development Plan 2016-2040, owing to the absence of government subsidies, which are present in Thailand, Indonesia, and Malaysia.
Miners in the Philippines had planned to benefit from Indonesia's ban on nickel exports, which will take effect in 2020. However, current environmental constraints will preclude the Philippines from fulfilling China's nickel production requirements in the absence of Indonesia, according to Market Intelligence's Metals and Mining Research unit, driving Chinese primary capacity down from a projected 715,000 tonnes in 2020 to 490,000 tonnes in 2025.
"Larger policy issues ... remain unresolved, particularly the ban on open-pit mining and the moratorium on new mining projects until a new mining tax scheme has been put in place," Dimaculangan said.
A prohibition on open-pit mining remains in effect in the Philippines, as does a restriction on new mining licenses before a new tax system is enacted.
"To encourage the building of extremely expensive mineral processing facilities and manufacturing plants for EV batteries as well as for clean energy and renewable power projects, the industry needs full government support in terms of stable mining and investment policies that do not change mid-stream," Dimaculangan said.
If the obstacles are overcome, the mining industry may be a crucial sector in the country's post-pandemic recovery, according to the COMP and the MGB.
"It stands to reason that if policy problems are not immediately resolved, the Philippines will remain an unattractive mining destination and will most definitely fall short of its tremendous potential to participate in this worldwide trend towards mineral-intensive renewable power generation and battery storage technologies," Dimaculangan said. "Otherwise, and this would be most unfortunate, the Philippines will, so to speak, miss the boat again."
For the time being, COMP sees the Philippine government's decision to authorize at least 26 new mining ventures that had been shut down by former Environment Secretary Regina Lopez to restart operations as a positive move for the industry.
Dimaculangan also expressed hope after the government decided to renegotiate the terms of its financial and technical assistance deal with OceanaGold Corp., the owner of the Didipio gold-copper mine in Quirino province.
"Once they are onstream, these projects will undoubtedly help increase the country's exports and the industry's contribution to our GDP," Dimaculangan said.
Philippine Resources - March 16, 2021
Income of Nickel Asia Up 52%
NICKEL ASIA Corp. gained P4.07 billion in attributable net profits in 2020, up 51.9 per cent year over year due to higher ore export rates. The listed business said in a regulatory filing on Thursday that total revenues increased 21.5 per cent to P21.77 billion from P17.92 billion in 2019. In the disclosure, the firm said, “The significant improvement in the realized nickel price of the combined ore exports and ore deliveries to the two plants in 2020 more than offset the slight decline in sales volume and the less favourable (Philippine) Peso to United States Dollar exchange rate.” Nickel Asia announced that it exported 10 million wet metric tons (WMT) of nickel ore in 2020, down from 10.4 million WMT the previous year. Despite lower ore exports, export prices increased 45 per cent year over year in 2020, to $33.99 per WMT. Ore supplies to the Taganito HPAL Nickel Corp. (THPAL) and Coral Bay Nickel Corp. (CNBC) HPAL plants fell 2.4 per cent to 8.2 million WMT in 2020, according to Nickel Asia, with an average price of $6.22 per pound of payable nickel. Nickel Asia said, “On a combined basis, the company sold a total of 18.2 million WMT at $22.46 per WMT and 18.8 million WMT at $16.69 per WMT in 2020 and 2019, respectively.” Total operating cash costs for 2020 increased 1% year on year to P10.68 billion, according to the company. It went on to say that the realized Philippine Peso to US Dollar exchange rate for ore sales in 2020 was P49.15, down from P51.72 the previous year. Nickel Asia President and Chief Executive Officer Martin Antonio G. Zamora reported that demand for nickel ore remained stable despite the coronavirus disease 2019 (COVID-19) pandemic. He said, “As Indonesia resumed its ban on direct export of nickel ore at the start of 2020, we realized higher prices for our ore exports. In spite of every consequence the global standstill brought, we took care of our people, we focused on our communities, and Nickel Asia survived 2020.” Nickel Asia's stock gained 7.21 per cent, or 0.37 centavos, to P5.50 apiece on the stock exchange on Thursday. Meanwhile, Atlas Consolidated Mining and Production Corp. reported on Thursday that its Carmen Copper Corp. (CCC) has been granted permission by the Department of Environment and Natural Resources (DENR) to resume mining operations in the Carmen Pit. The approval, however, does not allow for the resumption of work at the sections affected by the slide that occurred on December 21 last year, according to CCC. CCC stated that it will continue to enforce safety measures in the reconstruction of affected areas at the pit and that it is collaborating closely with various regulatory agencies and local government units to resolve the ongoing rehabilitation efforts. CCC's operations were halted in December after a slide occurred at its mining site in Toledo City, Cebu, due to heavy rains triggered by Typhoon Vicky. At least four people were killed. Atlas Mining's stock rose 2.22 per cent, or 14 centavos, to end the day at P6.46 per share on the stock exchange on Thursday.
Philippine Resources - March 11, 2021
CMC and RTNMC Awarded PMIEA
The Presidential Mineral Industry Environmental Award (PMIEA) has been awarded to Cagdianao Mining Corp. (CMC), based in Valencia, in Dinagat Islands, and Rio Tuba Nickel Mining Corp. (RTNMC), based in Bataraza in Palawan, for outstanding initiatives in the pursuit of excellence in environmental management. CMC and RTNMC are subsidiaries of NAC, the country’s largest nickel supplier. “The award for 2020 is made more significant because of the unprecedented challenges posed by COVID-19. Our employees had to exert double efforts and had to sacrifice personal time in order to achieve our goals, to ensure 100 per cent implementation of our commitments to all our stakeholders in the mining communities” explained Engr. Arnilo C. Milaor, Resident Mine Manager at CMC. Last year, the Dinagat-based company also received the Presidential Award. “The improved living conditions in the mining areas are proof of our commitment to the communities. One outstanding CMC project for example is the 19.2-kilometre farm-to-market road worth P12 Million pesos, connecting 5 barangays from 2 municipalities to the main provincial road, effectively providing the residents access to basic services like the hospital, and, most importantly, efficient access to trade and commerce,” said Engr. Aloysius C. Diaz, NAC VP for Operations. Rio Tuba Nickel has never stopped its operations and has won the Presidential Award 4 times – 2002, 2015, 2018, and 2020. “With strict enforcement of preventive measures against COVID-19 to protect employees and our host communities, we did not have work stoppage with no recorded-case of infection within the mine site, and, most significantly, we did not lay-off any worker” shared Engr. Cynthia E. Rosero, RTN’s Resident Mine Manager. According to Environmental Planner, Janice M. Tupas, Manager of the Mines Environmental Protection and Enhancement Dept. (MEPED) of RTN, “The qualifiers or applicants for the PMIEA must achieve a final rating of more than 95%. There are significant points also for ‘no unresolved notice of violations’; ‘compliance to operational and legal obligations, and no fatal work-related accidents.”
Philippine Resources - March 19, 2021
Nickel Prices are Forecast to Fall in 2021, According to Fitch Solutions
The costs of nickel is expected to fall in 2021 as more supply enters the market but will be supported by recovering economies, according to Fitch Solutions Country Risk and Industry Research. Fitch Solutions raised its average nickel ore price estimate for 2021 from $15,250 to $15,750 per ton in a survey. “Prices over the past few months have progressed to multi-year highs on the back of increased optimism in the market, a weakening dollar and bullish expectations about nickel supply,” Fitch Solutions said. The current nickel price is about $18,180 per ton, according to Fitch Solutions, but it will fall as supply in key markets increases. “The end of the rainy season in the Philippines will allow the resumption of nickel mining activity to feed nickel pig iron (NPI) facilities in China, its dominant nickel ore trading partner,” Fitch Solutions said. “We are maintaining our bearish outlook on prices in 2021 compared with the year-to-date average of $18,140 per ton as increasing supply over the year reduces the market deficit, maintaining lower prices.” Nickel prices are expected to rise gradually in the long run, according to Fitch Solutions, as the global market remains undersupplied. Demand is expected to remain stable due to continued growth in China's domestic construction and auto manufacturing industries, according to the study. “We forecast China’s construction sector to grow by an average of 3.8% year on year over 2021-2029 while vehicle production grows by an average of 1.2% over the same period. The rise in demand will exceed production growth in the short term, underpinning a prolonged deficit in the market and push prices higher,” Fitch Solutions said. According to Fitch Solutions, the electric vehicle (EV) market would raise nickel demand due to the need for longer-range batteries. “We expect this trend to begin taking hold over the coming years as consumers favour EVs with longer driving distance capabilities before recharging, making nickel-based battery compositions the optimal choice for vehicle producers,” Fitch Solutions said. Chamber of Mines of the Philippines Chairman Gerard H. Brimo said that policy changes that allow the Philippines to service demand from electric vehicle battery makers could help the industry. “While the Philippines is a top nickel ore producer, we only have two processing plants that produce nickel and cobalt sulfide concentrates — intermediate products that are further processed in Japan to make electric vehicle (EV) batteries,” he said. According to him, the two plants are run by Coral Bay Nickel Corp. in Palawan and Taganito HPAL Nickel Corp. in Surigao del Sur. “To enable our country to become a fully integrated EV battery supplier, certain policy changes have to be made, among them the lifting of the moratorium on new mining projects that has been in place for nearly a decade,” he said. “The industry needs full government support in terms of stable mining and investment policies that do not change mid-stream,” he added. According to the Mines and Geosciences Bureau, the volume of the metallic mining industry's production in 2020 increased 1.13 per cent year on year to P132.21 billion (MGB). Nickel ore and by-products accounted for 51.8 per cent of the total, or P68.48 billion, according to the MGB. The amount of direct-shipping nickel ore — the type in which the metal is shipped for processing overseas — increased by 3.3 per cent to 333,962 metric tons year on year (MT). Meanwhile, mixed nickel-cobalt sulfide production dropped 2.9 per cent to 49,647 MT year over year.
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Philippine Resources - May 07, 2021
DPWH says BGC-Ortigas Bridge to Open in June
The Bonifacio Global City (BGC)-Ortigas Bridge will open on June 12, said the Department of Public Works and Highways (DPWH). “Our target opening is on June 12, Independence Day. Motorists will be able to use the bridge next month,” DPWH Secretary Mark Villar said in a video posted on Facebook during his inspection of the project on Thursday. The bridge would connect the business districts of BGC and Ortigas, cutting travel time from an hour to just 12 minutes. He also said that the bridge is now 81% complete. "The entrance of the bridge is at Kalayaan (Avenue) and the exit is at Fairlane in Ortigas," he added. It will be able to accommodate about 50,000 cars a day when it is finished. “Next month on Independence Day, watch out for the delivery, the opening of the BGC-Ortigas Pasig Bridge,” Villar said. The government's PHP1.793 billion development programme is part of a plan to decongest Epifanio de Los Santos Avenue (EDSA).
Philippine Resources - May 07, 2021
DENR Applauds Women's Contributions to PH Mining
Women have made a major contribution to the growth and advancement of the country's mining industry, according to the Department of Environment and Natural Resources, with more women leaders advancing to top-level roles. “We need the active participation of women in policy formulation and program development not only to advance their rights in terms of decision-making and leadership but to empower them to address environmental challenges and climate change,” Environment Secretary Roy Cimatu said. According to Nonita Caguioa, DENR Assistant Secretary for Finance, Information Systems, and Mining Concerns, more women are now working in the mining industry, as shown by the increase in female workers in mining firms and at the DENR's Mines and Geosciences Bureau. “We have different mining companies in the nickel industry who already have women, senior officials. Not only in nickel mining, but we can also see now plenty of women in the mining industry in general,” she said. “There are even those who have just finished college in geology, metallurgy or mining engineering, some of whom are already employed with some of the mining companies or the government service,” Caguioa added. With more women working in the mining industry, she cited laws like Republic Act 9710, or the Magna Carta of Women of 2009, RA 7877, or the Anti-Sexual Harassment Act of 1995, and RA 7192, or the Women in Development and Nation Building Act of 1992, that promote and protect their rights. According to Caguioa, the DENR has non-discrimination clauses in mining licenses and arrangements to “respect the right of women workers to engage in policy and decision-making procedures that concern their interests and benefits.” Caguioa earned a mining engineering degree from the Cebu Institute of Technology before entering the DENR.
Philippine Resources - May 07, 2021
Semirara Mining Expects Profit Recovery This Year
Semirara Mining and Power Corp. (SMPC), a publicly traded integrated energy firm, expect some profit recovery this year, owing to improved coal and power demand and costs. SMPC chairman and CEO Isidro Consunji said at the company's virtual stockholders' meeting that the company's bottom line will boost as the coal and energy markets rebound from last year's historic lows. “To take advantage of the upswing, we will capitalize on our COVID-19 resiliency and adaptation strategy of focusing on our people, finances, and execution skills. However, given our operational headwinds and until our country reaches herd immunity, it is unlikely that we will return to our pre-pandemic profit level this year,” he said. The business ended in 2020 with a combined net income of P3.3 billion, down 66% from P9.6 billion the previous year. Revenues dropped 36.2 per cent to P23.3 billion as coal production, sales, and prices fell, while energy sales fell due to low power rates and Southwest Luzon Power Generation Corp's (SLPGC) expected and unplanned outages. The coal division of SMPC and the SLPGC plants will be the key drivers of development this year. With remedial steps introduced in Molave North Block 7 (NB7), the coal industry is expected to reach 13 million metric tons, according to SMPC president and COO Maria Cristina Gotianun. “This year, we expect our coal business to perform better on the back of recovering consumption and prices. The remedial measures we have been implementing since December have also allowed us to steadily normalize production. Now that the water seepage at NB7 has gone down to manageable levels, we expect annual production to hit 13 million metric tons,” she said. Due to excessive water seepages, SMPC postponed mining operations in Molave NB7 in early December, reducing coal output by 13% to 13.2 million metric tons. SLPGC is expected to drive profits in SMPC's power market due to higher sales, but Sem-Calaca Power Corp. (SCPC) is expected to produce poor performance. SCPC is the owner of the Calaca coal-fired power plant in Batangas, which it bought from the government in 2009 for $362 million. In the same location, SLPGC operates a 2x150-MW coal power plant. “For this year, we expect uneven results from our power subsidiaries. SLPGC is set to stage a strong profit recovery because of higher plant availability and better spot market prices. Unfortunately, SCPC is likely to deliver disappointing results because of the forced outage of its Unit 2 beginning Dec. 3 last year,” Gotianun said. SCPC's outage was triggered by a seven-month-old generator stator failing. Repairs are currently being negotiated with generator provider GE, according to Gotianun. “While they have agreed to cover the majority of the costs related to fixing the equipment, we are intent on making them shoulder all the necessary expenses. We expect to complete our negotiations within the year,” she said. “In the meantime, we are doing our best to fast track the repair of the generator. If all goes well, Unit 2 can be up and running by the third quarter of this year,” Gotianun said. This year, SMPC will invest P4 billion to rebound from last year's slump. The overall sum will be divided between SCPC and SLPGC for their prevention and repair services, with P2.9 billion going to buy mining and service equipment for the coal industry. Since the COVID-19 pandemic placed a burden on the company's liquidity last year, the management agreed to delay P3.7 billion of CAPEX to this year as part of its cash saving steps.