PH miners face stiffer competition in world market

by KARL R. OCAMPO, Philippine Daily Inquirer, Mar 29, 2018

The local mining sector is expecting a tougher business environment this year as the return of Indonesia to the international market is seen to pose stiff competition, said the chief of the Chamber of Mines of the Philippines (COMP).

COMP president and Nickel Asia Corp. CEO Gerard H. Brimo said that would be the biggest challenge in 2018, given that Indonesia was known to be one of the most important mining countries in the region with more than 500 mining projects nationwide.

To recall, the Indonesian government decided to impose a ban on unprocessed ore exports in 2014 to boost higher-value smelting industries, but the country’s economy faced a substantial budget deficit and missed its revenue target in 2016 by $17.6 billion.

With the resumption of shipments, the Indonesian government is hoping to help bridge the budget gap.

Brimo is banking on the “continuing strong demand for the metal, in part due to the growth taking place in the battery sector” to keep Philippine nickel exports at healthy levels.

The continuing decrease in the inventory of refined nickel in the global market also remains as an indication of the lack of supply of the metal, which Brimo said “should provide strong support to prices.”

COMP executive director Ronnie Recidoro said “Indonesia’s return will have an impact on nickel prices, although a lot will also depend on China’s economy and its need for the metal for its steel and renewable energy industry.”

“If China’s demand exceeds current supply levels, then the impact of Indonesia’s additional supply could be blunted,” he added.

Marcventures Holdings Inc. president Isidro Alcantara also expressed “deep concerns” about the mining sector’s outlook for the year, adding that the sector “will need the support and understanding of the government in looking at further fiscal regime changes.”

To recall, the Duterte administration is considering implementing a ban on ore exports to encourage domestic processing.

“That Indonesia is suddenly opening up direct ore shipments should also give us a pause on a total export ban. We need to study this carefully and allow time for a full or partial transition and we will also need a properly calibrated policy framework and strong government support to ensure its success,” Alcantara said.

“Given the very large investments needed for ore processing, if we rush it, we may end up having to bring foreign investors who may even take control of the nickel processing companies. In that case, the benefits of the country would not be as much as it should,” he added.

The executive also noted studies that point to up to 50 percent rise in Indonesia’s production in 2018. —