Corporate News

GFNI says fund managers concerned over DENR crackdown vs mining firms

Posted on August 30, 2016

INTERNATIONAL fund managers are still keen on the Philippine nickel mining sector, but the government’s crackdown against mining companies is a cause of concern, according to Global Ferronickel Holdings, Inc. (GFNI).

In a statement, GFNI said its executives recently met fund managers in Singapore who have “expressed an interest” in the nickel mining sector in the Philippines.

However, GFNI said potential investors “raised concern over the seemingly aggressive stance of the Department of Environment and Natural Resources (DENR) against mining companies.”

Environment Secretary Regina Paz L. Lopez has ordered an audit of the mining industry for environmental compliance, with at least eight nickel-ore miners suspended for failing to meet standards.

GFNI, the country’s second largest nickel miner, assured investors that the DENR’s actions are directed against illegal and non-compliant miners.

“The government has established rules and regulations, and FNI has consistently complied with the rules and regulations as we are committed to responsible mining. FNI has been granted ISO Certification 14001:2015 Environment Management Systems Certification for our operations in Surigao and received favorable feedback following a recent audit by regulators,” the company’s President Dante R. Bravo was quoted as saying in a statement. FNI is the company’s ticker symbol on the Philippine Stock Exchange.

Mr. Bravo said the company is poised to benefit from a further recovery in nickel ore prices and an expansion of its production capacity. After a decline earlier this year, nickel prices have recently rebounded by more than 30%, with Moody’s calling a bottoming of base metal prices.

“We plan to increase our production of medium and high-grade nickel ore to capitalize on the recovery… FNI is one of the lowest cost producers in the country. Our production will be year-round when the Palawan mine is operational in 2017,” he said.

The Philippines is the largest exporter of nickel ore to China, which is the largest consumer of nickel in the world.

At the same time, GFNI sees positive long-term growth prospects.

“Indonesia’s mineral ore export ban and China’s projected steady growth have kept up nickel demand. The inventory of refined nickel and nickel pig iron in China are gradually depleting. We also see the increasing demand for new energy vehicles, which use nickel in their new battery systems and the use of stainless steel in the construction of new nuclear power reactors in China to meet increasing demands for electricity as integral to the company’s growth story,” Mr. Bravo said.

For the first semester, GFNI booked a P281.88-million net loss, reversing the P152.97-million profit registered during the same period a year ago.

Revenues dropped 61% to P701.2 million for the first half, from the P1.79 billion recorded in the same period last year, “due to the increase in volume shipped, change in product mix and decline in the selling price of nickel ore.” -- Janina C. Lim