Philippine’s largest nickel mining firm suspends operations
Nickel Asia Corp., the country’s largest nickel mining firm, suspended on Monday operations of its subsidiary, Taganito Mining Corp. (TMC), in Claver, Surigao del Norte province, following attacks on its mining facilities by communist rebels.
The attacks are seen as a big blow to the mining sector as it highlighted security risks the Aquino administration will have to address while it seeks to attract investors.
Until recently, the mining sector was the darling of the local stock market amid buoyant global commodity prices.
Nickel Asia told the Philippine Stock Exchange on Monday that certain equipment of TMC and the smelting plant of its affiliate, Taganito HPAL Nickel Corp., were burned.
Nickel Asia has a 22.5-percent equity interest in Taganito HPAL, which is building a $1.3-billion HPAL (high-pressure acid leaching) facility. It was scheduled to start commercial operations at full capacity in August 2013.
The facility was expected to produce approximately 30,000 tons of contained nickel in 2014, the first full year of commercial operations at full capacity.
The stock market has yet to factor in reports about the attacks, which came out after the end of trading session.
Shares down
Shares of Nickel Asia, led by businessman Manuel Zamora Jr., were down by 4.6 percent to P17.26 per share alongside the bleak trading for the day. It had a market capitalization of P24.25 billion as of Monday’s close.
Joseph Roxas, president of local stockbrokerage Eagle Equities Inc., said the market would want to hear an official statement from the company on how extensive the damage was.
“Because of this, all mining firms will beef up security,” Roxas said.
Fund manager Gus Cosio, president of First Metro Asset Management, said his initial reaction was that the attack could be a stumbling block for mining.
“But I’m sure the government will try to protect other mining claims because of their economic significance. I think most mines make provisions for possibilities of things like this, anticipate that one day such visits would occur and some would try to extract so-called revolutionary tax. Nickel Asia probably already made provisions for that kind of scenario,” Cosio said.
Nickel Asia is one of the largest global suppliers of lateritic nickel ore. It accounts for over one-half of the Philippines’ nickel ore exports.
Taganito is one of Nickel Asia’s four lateritic nickel mining sites. The others are Rio Tuba, Cagdianao and Taganaan. Each site employs a low-cost open pit mining method, without the need for explosives, chemicals or complex waste handling.
It extracts two types of nickel ore: limonite ore, which occurs at the upper layer of the deposit and generally consists of lower nickel and higher iron content; and saprolite ore, which is generally found beneath the limonite layer and typically consists of higher nickel and lower iron content.
TMC, which is 65-percent owned by Nickel Asia, posted P1.14 billion in revenue from the sale of ore in the first six months, up by 4 percent from a year ago.
