Philippines Sees Nickel Boon on Indonesia’s Ban: Southeast Asia – by Cecilia Yap (Bloomberg News – January 13, 2014)

http://www.bloomberg.com/

The ban on mineral-ore exports from Indonesia, the world’s biggest nickel producer, is poised to benefit neighboring miners in the Philippines, which are predicting an increase in sales. Shares of Nickel Asia (NIKL) Corp. advanced to the highest level since July.

The ban is positive as demand and prices for Philippine supplies will increase, according to Emmanuel Samson, chief financial officer at Nickel Asia. The Taguig City-based company accounts for about a third of Philippine output, Samson said in a telephone interview.

While the Indonesian ban is intended to encourage local processing and boost the value of commodity shipments from Southeast’s Asia’s largest economy, the curbs may hand an advantage to rival producers such as Nickel Asia. Buyers in China, the top user, stockpiled ore before the ban and it may take as long as six months to work off that extra inventory, according to Samson. Producers in China also need to adjust to the lower grade of ore that comes from the Philippines, he said.

“If they do that, it would be very easy for us to ramp up production,” Samson said in an interview Jan. 9. “We think the increase is not going to be until such time that the inventory level will come down,” he said, referring to prices.

Refined-nickel futures jumped as much as 2.4 percent to $14,190 a ton today on the London Metal Exchange, the highest level in two weeks, on concern supplies will be reduced. The price may average $15,500 this year, according to an ABN Amro Bank NV report on Jan. 3 that cited the curbs in Indonesia and improved demand for the metal on the global economic recovery. Last year’s average was $15,081.

Shares Rally

Nickel Asia climbed 5.7 percent to 16.98 pesos (38 cents), valuing the company at 42.8 billion pesos. Sumitomo Metal Mining Co., Japan’s biggest nickel producer, owns 26 percent of the stock, according to data compiled by Bloomberg. Net profit was 1.1 billion pesos in the third quarter of 2013, 14 percent higher than a year earlier. NiHAO Mineral Resources International Inc. (NI) jumped 9.4 percent and Marcventures Holdings Inc. added 10 percent.

The two largest mined-nickel producers in 2012 were Indonesia and the Philippines, accounting for a combined 38 percent of the supply of the metal used in stainless steel, data from the International Nickel Study Group show. The Philippine ore grade is between 1 percent and 1.8 percent, lower than Indonesia’s, said Samson. Only about 10 percent of the company’s total production has 1.8 percent grade, he said.

Indonesia implemented the ban on ore shipments at the weekend after months of wrangling. The regulation which dates back to a mining law passed by parliament in 2009 prohibits exports of raw ores and allows shipments of minerals that are processed or refined in the country.

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