Nickel firm to invest $300M in smelter, power plant projects

MANILA, Philippines—Nickel miner Oriental Peninsula Resources Group Inc. (ORE) plans to build a nickel-smelting plant and a coal-fired power facility worth a combined $300 million within the next four years as it aims to ship out higher value-added output to overseas buyers.

ORE president Caroline Tanchay also told reporters after the mining firm’s annual stockholders’ meeting on Friday that the company was targeting as much as 50 shipments of ore to the overseas market starting the summer of next year, thus potentially doubling its output compared to this year.

Each shipment has an estimated volume of 50,000 tons of ore, representing the maximum capacity of each vessel. Six shipments are planned a month for the seven to eight months of dry season next year, Ms. Tanchay said. This translates to about 300,000 tons of monthly shipment during the dry season.

“On wet season, we will still ship out but lessen it to two to three vessels [a month] only,” Tanchay said.

Asked whether ORE was bracing for a potential decline in global demand for base metals such as nickel given risks of another global downturn, Tanchay said demand might slow down a bit but ORE could be able to maintain its growth trajectory. “It’s because we have very good quality of ore and only the Philippines, Indonesia and New Caledonia that have this kind of ore,” she said.

By 2012, Tanchay said ORE would start planning the establishment of a smelting plant with a projected annual output of 10 tons of pure nickel, which would allow the company to produce about 250,000 tons of ferronickel, an alloy of iron and nickel used in making nickel steels.

“When you make ferronickel, it’s almost finished product so the price you sell it for will be higher. Anybody who makes stainless [steel], produces equipment, machinery or products that need nickel as conductor or as an additive to make their product more durable is a potential buyer,” she said.

The selling price for the ferronickel will be based on prices at the London Metals Exchange.

On the other hand, a coal-fired power plant will be put up beside the smelting plant to meet the latter’s power requirements. The proposed power plant will have a capacity of 50-60 megawatts.

The smelting and power plant will require about $300 million but the first phase will cost only $150 million, about $80-$90 million of which will be used for the power plant and the rest for the ferronickel plant. The remaining $150 million investment will be for future expansion, she said.

For the power plant, Tanchay said ORE would likely bring in a Chinese strategic partner but the ferronickel plant would be controlled by the mining firm, yielding only 10-20 percent to a technical partner.

The smelting and power plant facility will not necessarily be in Palawan, where ORE’s nickel mines are located. “It can be in other areas where weather and logistics conditions are best suited for the plant,” Tanchay said.