Michael Defensor is racing to mine and ship nickel from projects across the Philippines to plug the gap in global supplies left by Indonesia’s ore-export curbs.
“Indonesia’s ban affected us positively,” said Defensor, chairman of Pax Libera Mining Inc. and the nation’s environment secretary from 2004 to 2006. He’s preparing four new sites for next year after opening two in the past two years. “We will maximize this window and ship as much as we can.”
The Indonesian curbs, designed to promote local processing, started in January and were upheld in court this month. The ban initially drove prices to a two-year high in May, before larger-than expected Philippine exports and slowing Chinese growth reversed the rally. Citigroup Inc. says it’s still bullish on nickel because the country won’t be able to expand supply much more and a global shortage will emerge.
Futures on the London Metal Exchange, the global benchmark for the metal used to make stainless steel, traded at $15,550 a metric ton on Dec. 19, from this year’s high of $21,625 in May. The price is still 12 percent higher for the year, making nickel the best performing industrial metal on the LME.
“Everyone will try to max out their permit,” said Ramon Adviento, a mining analyst at Maybank ATR Kim Eng Securities in Manila. “The low-hanging fruit has already been harvested even before the ban, so there is probability that the Philippines won’t meet the gap” left by Indonesia, he said.
Nickel Content
While ore exports from the Philippines to China rose 24 percent to 31.2 million tons in the first 10 months, some of that came from stockpiles, Citigroup analysts wrote in a Dec. 1 report. Volumes probably won’t expand much in 2015 even with more mining, they said. Ore from the Philippines typically has less nickel content than from Indonesia, which was the world’s largest mined producer before the ban.
The global market will swing to a deficit of 62,400 tons in 2015 from a 25,100-ton surplus in 2014, according to Citigroup, which expects prices to average $21,625 next year and $25,250 in 2016.
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