PH No. 4 in nickel by 2014

A scientist from Sumitomo discovered presence of scandium from nickel being refined by Nickel Asia. It is a rare mineral that sells $10,000 a pound. The by-product is largely used to further strengthen the alloy of nickel plated specialty steel products. (upper right picture) LME warehouses are filling up with 188,000 tons at the end of last month. Workers manage sacks of nickel ore that are to be transported to a port in Sorowako, in Indonesia’s South Sulawesi Province.

The Philippines will be the fourth largest producer of nickel metal in the world starting next year when the second refinery of Nickel Asia Corp. starts operations in Surigao.

The first refinery was set up by Rio Tuba Nickel Mining Corp. in Rio Tuba, Bataraza, Palawan a few years ago with total capacity of 24,000 tons a year.

The second refinery in Surigao is owned by Taganito Mining. Rio Tuba and Taganito have common stockholders. They are in joint venture with Sumitomo Metals of Japan.

The world’s biggest producer of nickel is Russia, followed by Canada and Indonesia. Before Sumitomo invested in refineries here, the Philippines is an unrecognized source of nickel metal in the world market.

The Philippines however is an established supplier of low grade nickel ore to China.

Together with the two companies, there are small miners extracting nickel.

They are supposed to use pick and shovel and production is limited to 50 tons a year but the industry has noted that many “small nickel mines” supposedly run by poor people use buck hoes and tractors. The small man has become a dummy of the big boys.

Rio Tuba started mining nickel in Bataraza about 40 years ago and there was a time when stockholders thought of giving up on the project. At that time, nickel ore was selling at $2 per ton in Japan. Now it sells at $13,000 per ton.

The cost of removing the moisture from the ore which contain about two per cent nickel was expensive. The moisture had to be reduced to about 15 per cent to reduce the cost of shipping.

A Japanese technician found a way of removing the moisture without electricity. The ore was filed in a way that solar heat takes away the moisture. Millions of pesos were saved in electricity cost.

The ore body in Bataraza was discovered by Atong Mamaclay, a noted geologist who died last week at age 97.

The idea of coming up with a refinery was prompted by the discovery of high-grade nickel ore and the slow but steady rise in the price of nickel metal in the world market. Management figured out that value added to refined nickel will compensate for the cost of refining equipment.

Low grade ore meanwhile are continuously exported to China.

Quite by accident, Japanese metal scientists from Sumitomo discovered a by-product called scandium. It is sold at about $10,000 a pound. The by-product is largely used to further strengthen the alloy of nickel plated specialty steel products. It is an extremely scarce commodity in the mining industry.

The company refused to tell Business Insight about whether or not Sumitomo has discovered commercial quantities of scandium. “We never stop working at it” says a Japanese official from Sumitomo Metals.

Nickel Asia is listed in the stock market. It made an initial public offering about two years ago. It was 20 times oversubscribed.

To avoid borrowing money for development and operational expenses, Nickel Asia shares its profits with stockholders by giving cash and stock dividends. The first stock dividend was 50 per cent made last year. Recently, it declared another 25 per cent stock. It keeps its policy cash dividends to its stockholders.

The earnings are converted into capital stock. The stockholders benefit by seeing their shares multiply without paying additional cost.

A Norwegian company is proposing to set up a nickel refinery in Mindoro. However, it cannot start operations pending the grant by the DENR of a permission to operate. The company has been lying in wait for about three years. Like Sagittarius, this company is prepared to wait it out. It continues to do community work. It is particularly interested in providing education and health care to the indigenous people of the two Mindoros particularly the Mangyans many of whom die of tuberculosis for lack of education on hygiene and sanitation.

The first nickel refinery in the country was attempted by Marinduque Mining and Industrial Corp. largely owned and controlled by the late Jesus Cabarrus. It went as far as setting up a pilot plant in Saskatchewan, Canada, courtesy of either Sherrit Gordon or Le Nickel of France.

In 1971, the Organization of Petroleum Exporting Countries abruptly raised the price of crude oil. The production costs went up vertically. The problem was worsened by the fact the nickel grade of its ore was lower than iron content of the ore.

In time, the company stopped the refinery and was practically taken over by creditors principally the financial institutions of the government.

There are mountains and mountains of ore with high iron content in the abandoned plant of Marinduque. Nickel Asia’s ores have high nickel content. –AMADO P. MACASAET, Malaya