NICKEL ASIA Corp. (NAC) and DMCI Mining Corp. on Wednesday said they are studying the feasibility of developing a nickel processing plant in the country.
This comes as the government is considering a ban on raw nickel ore exports to boost domestic processing.
In a joint statement, NAC and DMCI Mining said they signed a memorandum of understanding (MOU) “to explore the feasibility of developing and operating a nickel processing plant in the Philippines.”
Under the MOU, NAC is expected to provide its expertise in nickel processing technology and exploration, while DMCI Mining will contribute new assets and bring its parent company’s experience in construction and engineering.
In the next two to three years, NAC and DMCI Mining will “evaluate suitable technologies, identify an optimal site, and secure a stable ore supply.” However, this will depend on regulatory approvals.
Both companies also agreed to discuss the equity structure of a possible joint venture for the nickel processing plant’s development and operation.
The planned nickel processing plant would process low-grade nickel ore that is currently not viable for export, “maximizing the country’s mineral resources, generating new opportunities and boosting the local nickel industry,” they said.
Despite the current oversupply of nickel, NAC President and Chief Executive Officer Martin Antonio G. Zamora said the future is “bright” as demand is being driven by the electric vehicle and stainless-steel markets.
“Establishing an economically viable nickel processing plant in the Philippines requires several factors to align, including clear government policy directions and regulations, but proactive preparation is crucial. With the significant nickel resources needed and complex logistical challenges to navigate, early planning is essential for long-term success,” Mr. Zamora said.
Tulsi Das C. Reyes, president of DMCI Mining, said the project is “a step toward creating jobs and ensuring the sustainable use of our mineral resources.”
“By laying the groundwork early, we can help position the Philippines as a key player in the global nickel supply chain,” Mr. Reyes said.
Owned by the family of Manuel B. Zamora, NAC is a listed diversified natural resources development firm. Its mines produce saprolite ore, which is used as feed for ferronickel and nickel pig iron smelters in Japan and China, and limonite ore.
DMCI Mining is a wholly owned subsidiary of the Consunji-led listed company DMCI Holdings, Inc. It has assets in Palawan and Zambales and mainly exports nickel ore to China and other markets.
On Wednesday, shares in NAC inched up 0.85% to close at P2.37 a piece, while shares in DMCI Holdings went up by 0.71% to close at P11.30 each.
“The deal is a good signal on the further integration of mining downstream industries, specifically for mineral processing/smelting/refinery, similar to what Indonesia encourages when the latter bans the export of mineral ores,” said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Facebook Messenger chat.
“The preparations are in anticipation of the Senate bill’s passage into law.”
Last month, the Senate approved on third reading a bill that includes a provision banning raw mineral exports after five years, to give time for miners to build processing plants.
Congress is expected to approve the bicameral conference committee report when session resumes in June.
AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said the NAC-DMCI Mining deal was interesting, especially with the proposed ban on the export of raw nickel ore.
“It is a bit of an odd move for Nickel Asia, however, especially since they recently just sold their stake in the Coral Bay nickel processing facility due to the losses being incurred,” Mr. Garcia said in a Viber message.
“It would be interesting to see how the two companies would develop a more cost-efficient facility that can profitably operate even if nickel prices remain low,” he added.
Mr. Ricafort said high electricity costs in the Philippines pose risks to the project.
“Capital-intensive nature of investments would realistically take some time to establish,” he added.
Investment analyst Terry L. Ridon said the proposed facility should process both high- and low-grade nickel “to maximize the value potential of our nickel products.”
“In order for the country to corner a more significant slice of the EV battery supply chain, the main focus of any local nickel processing plant should be the processing of high-grade nickel ore,” he said via Messenger chat. — Kyle Aristophere T. Atienza
