Philippines Likely To Ban Export Of Nickel Ore, Says Consultancy

To take full advantage of its booming nickel production, there is internal pressure on the Philippines to encourage local beneficiation and ban the export of ore, says mining consultancy firm Core Consultants MD Lara Smith.

She explains to Mining Weekly that the Philippines government released a White Paper in September 2014 to fast-track a Bill aimed at providing for the mandatory domestic processing of all mineral ores, which will amend the Philippine Mining Act of 1995.

The Philippines’ ore exports have increased significantly, following the Indonesian ban on nickel exports in early 2014, on the back of increasing demand from China, Smith says, noting that the motivation for the export ban in Indonesia – to aid in-country value-added beneficiation – is similar to the possible Philippine ban.

She adds that, typically, in the first quarter, monsoon weather in the Pacific region significantly curtails exports, which reduces supply and saves the nickel price from plummeting further.

According to statista.com, the Philippines produced 440,000t of nickel in 2014, a production rate that has grown more than six-fold since 2006. Following the Indonesian export ban, there was not as much of a spike in nickel prices as was expected, which Smith attributes to stockpiling by importing nations, particularly China, noting that stocks of nickel ore at Chinese ports at the end of 2014 totalled 17.8-million tonnes. “The proposed ban on Indonesian ore exports resulted in the stockpiling of ore and, by the end of 2014, stockpiles of nickel reached an all-time high.”

She further explains that China’s shift to using ore from the Philippines meant that not all the stocks were used and, therefore, there was neither a decrease in supply nor a sustained increase in price. However, Smith thinks that the fall in China’s port and plant stocks, possibly affecting nickel pig iron, along with a predicted increase in stainless steel production by more than 5%, creates a strong possibility for the prices of nickel to increase over the medium term and remain stable in the short term.

The reduced supply to China, owing to the seasonal monsoon, and a possible Philippine ban on exports, could also bolster the upward mobility of the nickel price.

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Lara Smith

Lara is the CEO and founder of Core Consultants. She has been an analyst for over thirteen years and has focused on commodity markets for just over a decade. She began her career as a buy-side analyst at Foord Asset Management in Cape Town, before taking a Head of Research role at a mining corporate finance and investment firm.

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