ERAMET : Asian Nickel Conference

Louphok

11 sept. 2019 •11:38

ASIAN NICKEL CONF: Philippines unlikely to fill nickel ore supply gap arising from Indonesia's export ban, participants say

Among the hotly debated topics at Fastmarkets' seventh annual Asian Nickel Conference in Jakarta, Indonesia, this week was whether or not increased nickel ore shipments from the Philippines would be able to offset the supply gap that will arise once Indonesia halts exports of the material from next year.
The majority of conference delegates were of the opinion that while it was likely that the Philippines would ramp up its laterite ore output and exports, this would still be insufficient to entirely cover the absence of Indonesian material in the market.

"China might not be able to rely on the Philippines in 2020 as it did in 2014," Andy Farida, commodity research analyst at Fastmarkets, said at the conference on Tuesday September 11.

Conference-goers attributed mine depletion, low nickel grades and a strict mining policy in the Philippines as the main barriers to a significant ramp up in nickel ore production and exports in the country.

In 2014, when Indonesia previously implemented a ban on laterite ore exports, the Philippines became the largest supplier of the material to China, with the former shipping 29.7 million tonnes to Chinese shores that year, representing 76% of China's total imports.

In that same year, Philippine shipments of laterite ore jumped by 22% year on year - to 36.4 million tonnes in 2014 from 29.7 million tonnes in 2013.

In contrast, shipments of laterite ore from the Philippines to China only registered a small 5% increase year on year to 14.3 million tonnes in the first seven months of 2019.

In January-July of this year, China's imports of laterite ore totaled 26 million tonnes, an increase of 14.6% year on year, with volumes from Indonesia up by 35% year on year to 10.78 million tonnes.

"Chinese imports of Philippine laterite ore since 2014 have been hovering around 30 million tonnes, and never exceeded its volume registered in 2014 at 36.4 million tonnes," a laterite ore trader said.

"The problem with Philippine laterite ore supply is that some mines have experienced depletion due to years of mining activity and nickel grades there are lower than that in Indonesia. In addition, more strict regulations for mining in Philippine have been put in place," a conference delegate said.

"Some Philippine miners are experiencing resource depletion, such as SR Languyan Mining Corp and Altawitawi Nickel Corp, and we can hardly see a notable increase in ore shipments these days," a second delegate said.

Fastmarkets assessed the price of nickel laterite ore, cif China on the basis of 1.8% nickel content at $64-66 per tonne on September 6, up from $59-61 per tonne on August 30, following gains in the London Metal Exchange three-month nickel price due to supply concerns surrounding Indonesia's export ban.

Indonesia initially implemented a ban on laterite ore exports in January 2014. Three years later, the country's energy and mineral resources minister announced new legislation allowing exports to resume under certain conditions. The Indonesian government granted a five-year grace period, ending in 2022, to encourage the development of processing facilities to increase value across the domestic supply chain.

On August 30, however, the Indonesian energy and mineral resources ministry announced that the nickel ore export ban will be expedited by two years and go into effect on January 1, 2020.