GLOBAL Ferronickel Holdings, Inc. reduced its target shipment volume this year by 8% to 5.5 million wet metric tons (WMT) from the original 6.6 million WMT, as the company focuses on higher-grade nickel ore.
This as the lower prices of nickel ore and a decline in shipment volume weighed on FNI’s bottomline during the second quarter, with net income falling by 37%.
“Based on market observations, the group saw the need to take advantage of the higher market price of Saprolite nickel ores. As such, the target was revised to focus more on the shipment of higher-grade ores, thereby changing the product mix (i.e., more high grade and fewer low grade ores) and reducing the overall 2018 target shipment volume from 6.0 million to 5.5 million,” FNI said in a regulatory filing.
The nickel producer said mining higher-grade ore would result in lower shipment volume since this involves more processing, but will have higher average realized ore price.
“It is the first time in the past several years that we are pushing for shipment of higher-grade nickel ores with 1.65% nickel content to take advantage of its relatively high price with better margin,” FNI President Dante R. Bravo was quoted as saying.
In the same regulatory filing, FNI said its net income declined by 37% to P168.74 million during the April to June period, while the first semester figure plunged 97% to P3.98 million from P151.76 million in the same period last year.
Revenues during the January to June period slipped by 23% to P1.43 billion. Sale of nickel ore slipped 19% to 1.91 million WMT, as FNI only shipped 28 vessels of nickel ore during the first semester against 35 vessels a year ago.
“The decrease in the number of shipments, and consequently in the volume of nickel ore shipped, was brought about by the management’s decision to push for the sale of higher grade nickel ores to take advantage of the higher market price,” FNI said.
The listed miner noted the average realized nickel ore price for the first six months of 2018 stood at $17.59 per WMT compared to $19.44 per WMT during first half of 2017. For its export revenues, FNI said the average peso-dollar exchange rate was 5% higher at P52.46 to $1 during the first semester, compared to P49.99 to $1 a year ago.
“Despite a very challenging first half of the year, measures to boost operational efficiency and our ability to adapt to the changing market conditions continue to enable us to achieve positive results,” Mr. Bravo said.
