While the news sent many nickel market participants reeling, largely because up until the ban was passed, the expectation was that Indonesia — a major supplier of nickel ore — would not go through with an unadulterated ban, it is proving to be a boon for the Philippines. That’s because in the absence of Indonesian ore, many analysts and investors are turning to the nation as a likely source of nickel.
World’s biggest reserves
The Philippines is the fifth-richest country in the world in terms of mineral resources, according to Bulatlat. It also has the largest nickel reserves in the world; unsurprisingly, 21 of its 35 operating mines are currently devoted to that metal, up from only nine in 2009. In addition, four new projects are in development, with production expected to begin between now and 2017.
Nickel Asia is the largest nickel producer in the country. Its mines include Rio Tuba, Taganito, Hinatuan and Cagdianao. Other companies in the space include Benguet, Platinum Group Metals, Berong Nickel and Eramen Nickel, which is fully owned by Eramen Minerals.
Last year, those and other companies brought the Philippines’ nickel production total to more than 330,000 metric tons (MT) of nickel, the US Geological Survey states. That makes the nation the top producer of the metal, above even Indonesia. And, for the next few years, the Chamber of Mines of the Philippines sees the country producing 25 million MT of nickel direct shipping ore annually.
Filling the void
Given those figures, it’s understandable that the Philippines is eager to slip into the void Indonesia has left behind. However, the country is likely not the sole answer to the deficit in the market.
Expanding on that idea, Gerard H. Brimo, CEO of Nickel Asia, told Metal Bulletin last September that in the event of a strict ban in Indonesia, the Philippines will not be able to make up for all the lost supply. Even so, what nickel the Philippines can provide will almost certainly fetch higher prices as the market comes out of oversupply.
Economic and geopolitical conditions
While that may sound promising, those interested in investing in Philippines-based nickel miners should be aware that many of the mining tenements in the Philippines are in the ancestral territory of indigenous tribes. Mining companies sometimes face opposition from locals on certain pieces of land for this reason, and the conflicts that ensue can be complex and bloody.
For instance, in 2011, members of a Filipino tribe protested a mining venture on Palawan, an island in the country. The tribe did not want its ancestral land being used for mining and involved NGO Survival International, which, according to MINING.com, campaigns for the rights of indigenous peoples. Other protests on the same grounds have occurred in the past.
The Philippines’ mining policy, which was enacted in 2012, is aimed at combating such issues; its primary objectives are to ensure that the country’s government gets a share of mining revenue, that the environment is protected and that mineral resources are used responsibly. Other efforts have recently been made to create consistency between local and national laws and policies on mining and help improve the regulation of smaller mining operations.