Bad weather, shipping woes dent nickel output in 2021


ERRATIC weather conditions and the global shipping problems, particularly the lack of vessels, may pull down the country’s nickel production this year below last year’s 27.17 million dry metric tons (DMT) level.

Philippine Nickel Industry Association (PNIA) President Dante R. Bravo explained that the mining industry has experienced a lot of rainfall this year, which he pointed out is something they never experienced before, causing operational problems to mines. Furthermore, Bravo noted a “shortage” of vessels in the global shipping and logistics market, resulting in higher demurrage rates.

“For our own operations [Global Ferronickel] we will not be able to hit our target this year [of 100 vessels]. Our production is down by 10 percent, at most we will only hit 90 vessels,” he said in a virtual briefing on Wednesday.

“There’s also a limitation on the incoming vessels, there is a shortage of vessels and that is why the demurrage rate went up so high. These are the two problems we are facing this year,” he added.

Given these problems, Bravo said he expects the industry’s overall production to be “less” than last year’s output.

“Our production is basically down. Most of the mining companies that supply nickel to China or produce nickel for export within the region share the same weather pattern, so the production will be down overall,” he said.

“Every year more or less the production is around 25 million DMT to 30 million DMT. We expect it is going to be slightly down in terms of volume,” he added.

Nonetheless, Bravo said they expect an increase in the value of the country’s nickel production as global prices for the metal have been increasing and currently holding strong at the $20,000 per MT average quotation.

“In terms of value, it is going to be higher than the previous years. We have seen prices growing steadily since the start of this year because of the increase in Chinese demand,” he said.

In 2020, the Philippines produced 27.17 million DMT of nickel direct shipping ore, which was 4 percent higher than the 26.212 million DMT recorded in 2019, based on government data.

In terms of value, nickel output last year was worth P38.387 billion, 21 percent higher than the P31.653 billion recorded in 2019.

For the first half, the country’s nickel output expanded by 43 percent to 12.549 million DMT from 8.779 million DMT recorded in the same period of last year. In terms of value, first half production nearly doubled to P21.419 billion from P10.793 billion recorded in the first half of 2019.

Image courtesy of Rafael C. Azada IV

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