Nickel Asia sees better ore output, slashes capex

MANILA, Philippines —  Nickel Asia Corp. (NAC) expects better ore output this year, driven by the start of two new mine operations and the possible increase in global nickel prices.

The miner targets to produce anywhere between its historical average of 16 million and 19 million wet metric tons of nickel ore this year.

Last year, NAC produced 16.45 million wet metric tons, up by 3.2 percent from 15.94 million metric tons in 2022.

“We will continue to be at the same level in terms of growth. Maybe not a lot of growth, but maybe it will still be growing by low single-digit,” NAC vice president for treasury and investor relations and sales Andre Mikael Dy said during the company’s recent earnings call.

“We will do our best to produce anywhere between 16 million and 19 million, especially with us opening the new mine sites. I think that would be the range that we’re looking at,” Dy said.

Dy said two new mines – Bulanjao and Manicani – would contribute to the firm’s overall output this year.

He said that Bulanjao has already started this month while Manicani is expected to begin operations by June.

The Bulanjao mine in Palawan has a production capacity of about two million wet metric tons, while the Manicani mine in Eastern Samar can produce up to three million wet metric tons.

Dy said the global nickel market is facing a huge supply glut, causing prices to go down to the detriment of nickel-producing countries like the Philippines.

He said the oversupply was due mainly to surging production from Indonesia, the world’s top producer of nickel.

In the medium to long-term, however, NAC expects nickel prices to improve as “some” global supply tightness will be felt particularly by 2028 as demand for the metal is expected to outpace output.

Dy said NAC’s capital expenditure for this year would be “half or less than half” compared to the firm’s P4.5 billion capex last year.

He said that majority of the firm’s capex would be used for the mines’ heavy equipment requirements.

“It will be much less than what we spent for last year. Last year was an outlier because we had to do a lot of equipment replacement,” Dy said.

NAC earlier reported that despite higher ore shipments, its net income plunged by more than half to P3.7 billion in 2023 due to lower global nickel prices.