ROUND-UP - FastMarkets on impact of Phillipines nickel mining crackdown

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Ian Walkerian.walker@fastmarkets.comPhysicals Reporter+44 (0) 20 7337 2145

London 25/07/2016 - The Philippines' Department of Environment and Natural Resources (DENR) two weeks ago ordered an audit of all operating mines in the country and a moratorium on the approval of new mining projects effective immediately.  Several nickel mining operations have since been suspended - its new environmental minister, Regina Lopez, has said the government will look to shutter any mines that do not meet environmental regulations.

FastMarkets has been looking in depth at the impact - immediate and over the longer term - of this move on the nickel industry as a whole:

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- Nickel market participants continue to downplay the long-term effect of mining developments in the Philippines even after a sixth nickel miner was ordered to stop production. Indeed, concerns that mining in the Philippines has been affected by the recent audit have been overblown, the Philippines Chamber of Mines' legal expert Ronald Recidoro said.

- Major banks are divided on whether the current and potential supply-side disruptions from the Philippines can decisively turn the nickel market around - their price outlooks differ accordingly.

- China's nickel pig iron producers, which are already struggling to maintain output due to a growing scarcity of raw material, face the worrying prospect of a prolonged or permanent reduction in the availability of ore from the Philippines. But nickel traders see a limited impact on China from current and potential supply-side disruptions mainly because of signs of weak demand, high domestic stocks and the ready availability of replacement material.

- Around 15 percent of global nickel supply from the Philippines is at risk following the suspensions of two nickel miners on environmental grounds, Morgan Stanley said.

- Nickel Asia Corp, the largest nickel miner in the Philippines, has scheduled additional shipments of its limonite ore to China this year to make up for the drop in nickel ore shipment volumes in the first half. And while it said nickel ore stockpile shipments from Manicani Island may be halted, it has downplayed the impact in such a situation.



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