Nickel Asia profit drops 26% in H1

MANILA, Philippines - Nickel Asia Corp. reported a 26-percent drop in its net income in the first half of the year to P1.27 billion, weighed down by lower global metal prices.

In a financial report submitted to the Philippine Stock Exchange, Nickel Asia said revenues slightly fell to P5.31 billion from P5.37 billion as sale of ore declined by 2.32 percent to P5.07 billion. 

“The drop in earnings was mainly the result of much lower London Metal Exchange prices despite shipment volume increasing by 19 percent,” Nickel Asia said.

Total volume of nickel ore sold and delivered from its four operating mines grew to 5.02 million wet metric tons from 4.22 million WMT in 2011.

The realized LME nickel price applicable to 2.37 million WMT of ore shipped in the first half averaged $8.6 per pound, down from the $11.48 per pound the previous year. The balance of the shipments sold was on the basis of a negotiated price per WMT of ore which averaged $25.87 per WMT of ore as against $21.73 per WMT last year.

The increased sales volume also pushed operating costs 38 percent higher to P2.88 billion. On a per WMT of ore sold, total costs and expenses rose to $13.37 per WMT compared to $11.33 per WMT a year earlier.

The firm’s Rio Tuba mine accounted for 55 percent of total shipments or 1.1 million WMT of saprolite ore and 1.7 million WMT of limonite ore. 

The Taganito mine, on the other hand, shipped a total of 495,000 WMT of saprolite ore, as well as 550,000 WMT of limonite ore mostly coming from existing stockpiles.

The company’s two other operating mines, Hinatuan and Cagdianao, commenced shipments only in April and May, respectively, following the end of the wet season. The Hinatuan mine shipped a total of 894,000 WMT of limonite, while the Cagdianao mine shipped a total of 90,000 WMT of saprolite ore and 210,000 of limonite ore.

Construction of the Taganito nickel processing plant adjacent to the Taganito mine, the country’s second hydrometallurgical downstream processing plant, proceeded well during this first half and has now exceeded the 50-percent completion mark. Commercial production is expected towards the latter part of next year.

Gerard H. Brimo, president and chief executive officer of Nickel Asia, remains optimistic about the company’s prospects for the year, saying “all indications point to the company achieving record shipment volumes again this year notwithstanding global macro-economic factors affecting all commodities.”