By: Philippine Resources November 11, 2022

Photo Credit: Arrow Creatives

Nickel Asia Corporation recently announced its unaudited financial and operating results for the nine-month period ended September 30, 2022, with an attributable net income (net of minority interest) of P6.90 billion, up 12 percent from the P6.17 billion reported during the same period last year. Earnings before interest, tax, depreciation, and amortization (EBITDA) amounted to P11.10 billion against P11.01 billion in the prior year.

Despite the lower ore sales volume sold during the period, revenues rose by 2 percent to P21.51 billion from P21.03 billion last year, owed largely to higher nickel ore prices and favorable exchange rates.

The Company’s five operating mines sold a combined 12.44 million wet metric tons (WMT) of nickel ore during the first nine months of the year, a decrease of 14 percent from 14.44 million WMT in the same period last year.

The drop in sales volume was almost in direct proportion to unrealized workable days caused by unfavorable weather that adversely affected the Company’s mining operations during the period.

The weighted average nickel ore sales price during the period increased by 5 percent to $29.46 per WMT against $28.05 per WMT in the same period last year. The company realized P54.22 per US dollar from these nickel ore sales, a 10-percent increase from P49.17 last year.

Breaking down the ore sales, the Company exported 6.68 million WMT of saprolite and limonite ore at the average price of $38.87 per WMT during the nine-month period from 8.72 million WMT at $38.88 per WMT in the same period last year.

Likewise, the Company delivered 5.76 million WMT of limonite ore to the Coral Bay and Taganito highpressure acid leach (HPAL) plants, the prices of which are linked to the London Metal Exchange (LME) and realized an average price of $11.66 per pound of payable nickel.

This compares to 5.72 million WMT at $8.20 per pound of payable nickel in 2021. Expressed in US dollar per WMT, the average price for the deliveries to the HPAL plants were $18.55 and $11.54 in the first three quarters of 2022 and 2021, respectively.

“Despite the challenges in our mining operations due to adverse weather conditions at our mine sites, the favorable LME nickel price and strong US dollar helped drive revenues up by 2 percent from the prior year,” said Martin Antonio G. Zamora, President and CEO.

Owing to the higher LME nickel price during the period, NAC also recognized gains from its equity share in investments in the two HPAL plants in the combined amount of P1.02 billion against P340.4 million the prior year.

The strong US dollar further enabled NAC to log a 162-percent hike in net foreign exchange gains from its foreign currency denominated net financial assets to P1.54 billion from P587.2 million the year prior.

Total operating cash costs increased by 8 percent year-on-year to P9.54 billion from P8.86 billion last year. On a per WMT sold basis, total operating cash costs increased to P767 compared to P614 in 2021.

Renewable Energy

NAC’s renewable energy arm, Emerging Power Inc. (EPI), on a consolidated basis, registered a 60-percent increase in revenues to P393.67 million and a 51-percent increase in EBITDA of P239.50 million.

This was primarily due to a 56-percent year-on-year increase in the generation capacity of its operating arm Jobin-SQM Inc. (JSI) to 79,022-megawatt hours after the completion of its 38-MW expansion last June, bringing its total capacity to 100 MW.

Between January and September of this year, 70 percent of the power from JSI’s Sta. Rita plant were sold to retail electricity suppliers through power supply agreements while the remaining 30 percent were sold to the Wholesale Electricity Spot Market (WESM). Overall, power sales were done at an average realized tariff of P4.98 per kilowatt-hour.

JSI logged a net income of P72.83 million, allowing EPI to trim its losses to P133 million from the same period last year, a 53-percent reduction thanks to higher economies of scale and improved market conditions.

EPI also began the development and construction of an additional 68 MW in the Subic site last September, set to go online by the fourth quarter of 2023.

In terms of the Forecast Accuracy Standards for variable renewable energy sources in the WESM, the Sta. Rita solar power plant also ranked first out of 29 solar plants in Luzon and third out of 41 solar plants across the country in terms of performance, based on the latest report of the Philippine Electricity Market Corporation in May.

Forging ahead, EPI also recently entered into a joint venture agreement with Shell Overseas Investments B.V. for the establishment of a platform to develop, own, operate, and maintain utility-scale onshore solar and wind power generations projects as well as battery energy storage systems in the Philippines.

The venture, with an equity ownership of 60-percent EPI and 40-percent Shell under a newly formed company Greenlight Renewables Holdings, Inc., aims to have an aggregate operating capacity of 1,000 MW by 2028.

“The joint venture has the full support of EPI’s parent company, NAC. This partnership would allow both companies to boost the supply of renewable energy in the Philippines and is in line with NAC’s vision to become the premier ESG investment in the country,” said Zamora.

Lorelie Q. Osial, country chair of the Shell Companies in the Philippines, also echoed the same sentiment: “Working with partners and developing new collaborations is key to accelerate the energy transition. This Shell-EPI partnership will leverage on Shell’s technical expertise and integrated solutions as a global energy company and EPI’s strong presence in the Philippines. Together, we can power progress for the Philippines through sustainable energy for industries and homes.”

Ultimately, the joint venture is an opportunity to provide integrated value to customers through exploring synergies with retail electricity supplier Shell Energy Philippines, Inc.

Special Cash Dividend

The Company’s Board of Directors approved the declaration of a special cash dividend of P0.23 per share of common stock, payable on Dec. 9, 2022, to shareholders of record on Nov. 24, 2022.


Article courtesy of the Philippine Stock Exchange

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