Tuesday, December 12, 2017
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Mining firms rush to regain lost ground

Mining companies both here and abroad heaved a collective sigh of relief when the Commission on Appointments (CA) rejected last May the nomination as Environment Secretary of Regina Lopez, who rocked the industry during her 10 months in office.

Lopez had ordered the closure of 23 mines and suspension of five others as well as the cancellation of 75 mineral production sharing agreements.

This appeared to have signaled a recovery in global nickel prices as her closure orders affected about half of the Philippines’ output of the base metal, which is used in the production of stainless steel.

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Two months later and mining firms are rushing to at least regain lost ground while some are talking about ramping up their businesses.

Barely two weeks after the CA turned down Lopez, DMCI Mining announced that subsidiaries Berong Nickel Corp. and Zambales Diversified Metals Corp.—both targets of Lopez’s orders, which are the subject of pending appeals at the Office of the President—are tracking down their displaced workers for rehiring. DMCI Mining said it let go of four out of five workers as of the first quarter, when Lopez’s orders were still fresh.

By mid-June, DMCI Mining was expecting to send out four cargos of ore to China after shipping out only three loads in the entire first quarter.

Meanwhile, Global Ferronickel Holdings Inc. (FNI), the largest single lateritic mine exporter in the world, last week said its unit Platinum Group Metals Corp. (PGMC) shipped 1.75 million wet metric tons (WMT) of nickel ore in the first semester, close to double the 1.04 million WMT sent out in the same period of 2016.

Average realized price was also better at $18.40 per WMT compared to $13.90 per WMT perviously.

FNI president Dante R. Bravo says the group expects to meet the target of shipping out 6 million WMT for this year.

Bravo says FNI was well-positioned to take advantage of the projected rebound in nickel prices as well as the increased demand for stainless steel due to Asia’s rapid urbanization.

But everything is not going smoothly, as another FNI subsidiary, Ipilan Nickel Corp. (INC), is being hounded by the Department of Environment and Natural Resources, for “indiscriminately fell[ing]” 7,000 trees in Palawan.

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The DENR, under a new leadership, insists that INC should not have done so because the company’s environmental compliance certificate was cancelled as ordered by Lopez. FNI, for its part, argues that the order was the subject of a motion for reconsideration and, thus, was not in force.

Bravo defers further comment on the matter, but he expresses a bullish outlook, noting that DENR chief Roy Cimatu has vowed to promote the industry.

Considering this, Bravo said FNI expects that there will be “no policy shift, no disruptive announcements, [and] no new regulations which will scare away investors.”

ECR Minerals Plc put it more frankly, when the London-based firm said in a statement that “[w]ith the removal in May 2017 of Regina Lopez as Secretary of the [DENR], the political outlook for the mining industry in the Philippines has improved, although uncertainty remains.”

ECR downplays the continued non-issuance of an exploration permit applied for by local affiliate Cordillera Tiger Gold Resources Inc. (CTGR), operator of the Danglay gold project in Benguet.

“In view of the disruption caused by the tenure of Ms Lopez as DENR Secretary, it is unsurprising that the renewal of the exploration permit (EP) comprising the Danglay project has yet to be received by CTGR,” ECR chief executive Craig Brown said.

“The [board] directors remain of the view that the [permit] is likely to be renewed in due course, and ECR is ready to work with all parties to preserve the value of Danglay as a significant exploration opportunity in the prolifically gold-copper mineralized Baguio District,” Brown said.

The picture is more somber with Australian firm Red 5 Ltd.’s Philippine affiliate, Greenstone Resources Corp., which voluntarily suspended mining activities at the Siana gold mine in Surigao del Norte.

Red 5 said the Siana project was halting operations despite having passed a mine audit conducted by the DENR due to “the operational impact which the current uncertainty regarding regulatory and government mining policy in the Philippines has had on the group’s operations.”

The company also said it had made the decision based on its assessment of the likely resulting changes to open pit operations, mainly due to the delay in the approval of the amended ECC for the long-term tailings storage facility (TSF).

Operations at Siana had been suspended in relation to damage to a tailings pond in the area. Because of this, Greenstone wants to build a new, long-term TSF, but the required amended ECC remains pending.

Still, while the mining sector has been relieved of what industry players saw as a clear and present threat to their existence, this very same development has contributed significantly to the emergence of another, equally serious predicament.

Nickel prices globally are deflating partly because the two largest suppliers—Indonesia and the Philippines—are expected to drive up world inventory amid better regulatory environments.

At the London Metals Exchange, a ton of processed nickel was tagged at $9,060 as of July 5. That means a $420 drop from $9,480 a ton in the first trading day of May.

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TAGS: Commission on Appointments (CA), DMCI Mining, mining companies, Regina Lopez
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