Nickel at 9-month high on Philippine environmental fears – by Neil Hume (Financial Times – July 12, 2016)

Nickel has powered to its highest level since October 2015 as investors become increasingly concerned about an environmental crackdown in the Philippines. The Philippines has emerged as the top supplier of nickel ore to China since Indonesia banned exports of unprocessed raw materials in 2014, writes Neil Hume.

It was the largest producer of mined nickel globally last year, accounting for 465,000 tonnes, or 22 per cent of global output, and 97 per cent of total ore imported in China, according to Standard Chartered. Filipino is used by Chinese mills to produce nickel pig iron, a cheap alternative to refined nickel.

Those supplies could now be in danger after the new president of the Philippines Rodrigo Duterte ordered a review of the country’s mining industry.

Nicholas Snowden, analyst at Standard Chartered, said: “Several aspects of the Philippines environmental mining review suggest to us that the supply risks cannot be dismissed at the current juncture. Environment minister Regina Lopez – driving the review – appears to have an extremely negative view of the mining sector, which will likely shape its conclusions.”

Indeed, Ms Lopez has already said open pit mining – the method most widely used to produce nickel ore – should be banned because it is not environmentally friendly. She has also said that mines with certification from the International Organisation for Standardisation will not necessarily avoid suspension.

“In the province of Zambale one of the operators (Benguetcorp Nickel Mines) suspended last week also held ISO certification,” noted Mr Snowdon.

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