Singapore 19/07/2016 - Nickel Asia Corp (NAC), 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 of the year.
NAC's four operating mines - Taganito, Rio Tuba, Hinatuan and Cagdianao - sold 8.54 million wet metric tonnes (wmt) of nickel ore in January-June, down 11.8 percent from a year ago, the company said in a filing to the Philippine stock exchange on Monday.
"To address the shortfall in shipments, the company's Taganito mine has scheduled additional shipments of limonite ore to China for the year," NAC said.
Its limonite ore, which contains 20 percent or more iron and 1-1.5 percent nickel, are sold to China to produce medium- and low-grade nickel pig iron (NPI) as well as to the Coral Bay and Taganito HPAL processing plants in the Philippines.
The additional shipments could prove timely for Chinese NPI producers because nickel ore stocks at the country's main ports have dropped to low levels of around two months of consumption, sources estimated.
China will need to stockpile nickel ore to last for around six months of usage before the rainy season starts in the Philippines - typically from late in the year until March of the following year - which hampers mining and logistics in parts of the country.
The rate of consumption among Chinese NPI producers could slow, however, should there be a prolonged shutdown of smelters in Inner Mongolia, others noted.
Still, there remain concerns in the market that a month-long mining review being conducted by the Philippines government could see more disruptions to domestic mining and to nickel exports from the country.
The mining crackdown in the Philippines saw the LME three-month nickel price trade above $10,000 per tonne since July 12. It was last at $10,515 on Tuesday morning, up $30 Monday's close.
The first-half decline in NAC's sales volumes was due to the delayed start of shipments from its Hinatuan and Cagdianao mines owing to a prolonged rainy season and sea swells in northeastern Mindanao where the two mines are located.
Additionally, its limonite ore sales volume to the Coral Bay and Taganito processing plants declined because the latter underwent remedial work for over a month. But the work has since been completed and the plant is currently in full production, NAC noted.
"Tightness has now entered the nickel market as a result of supply cuts and an increase in stainless steel production, resulting in a drop in LME nickel inventories and improving nickel prices. This is timely as we enter our peak shipment season in the second half of the year," NAC president and CEO Gerard Brimo said in the filing.
The Philippines become China's largest source of nickel ore after Indonesia banned the export of unprocessed mineral resources in 2014.
China imported 34.28 million tonnes of nickel ore from the Philippines last year, down 5.9 percent from 2014, according to Chinese customs data.
(Editing by Mark Shaw)