LONDON – Is the Philippines’ draconian mining clampdown already affecting the flow of nickel ore to China’s nickel pig iron (NPI) producers? It certainly looks that way. Exports of ore to China always drop at this time of year due to the rainy season, which affects both mining and shipping.
But China’s trade figures for January showed imports of Philippine nickel ore were still 20 percent lower than last year’s level. And the betting is that they will continue trending lower after the Philippines’ feisty environmental minister, Regina Lopez, ordered the closure of over half the country’s mines, many of them nickel operations.
Nickel bulls, however, should be wary. China’s import picture is also one of growing diversification of supply, not least from Indonesia, the other political wild-card in the nickel supply chain.
THE POLITICS OF ORE
China’s imports of ore from the Philippines were 779,000 tonnes last month, the lowest January reading since 2012, when the country was still a second-tier supplier after Indonesia. All that changed when Indonesia enacted its ban on the export of unprocessed minerals, including nickel ore, at the start of 2014.
The Philippines stepped into the gap left by Indonesia and has since become China’s dominant nickel ore supplier. Hence the market excitement when Lopez lived up to her previous eco-warrior credentials and ordered the closure of 23 mines and the suspension of five others, putting at risk close to 9 percent of global nickel supply.
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