Miners shrug off yuan devaluation

MANILA, Philippines - Philippine miners are unfazed by China’s devaluation of the yuan, believing there would be no significant effect on demand and prices for nickel.

Dante Bravo, president of Global Ferronickel Holdings Inc., (FNI), said the yuan devaluation would not immediately affect the price of nickel ore export to China due to limited supply from the Philippines.

“At this point, it has no effect yet. We will see in the coming days if this would bring the prices down. Naturally, with the devaluation of the yuan, it would make China’s import of ore from the Philippines more expensive as we are paid in dollars. So, there is a tendency for the devaluation to bring the price down if the demand contracts. However, as we have observed, the LME (London Metal Exchange) price for nickel has already bottomed but the price in Shanghai metals market is relatively stable because of a supply deficit of ore to China. Hence, we do not see the prices to be going down further,” Bravo said.

He noted that with the depreciation of the peso, exporters get more earnings out of every dollar in payment.

Even with the more expensive cost of metal imports, China is “unlikely” to cut down in imports of nickel ore because supply is limited, he said.

In an Aug. 7 briefing, FNI announced the $50 million acquisition of a nickel mine in Palawan to augment its operations in Surigao and double the company’s annual production capacity, making it the second largest nickel producer in the country.

Bravo said during the briefing that nickel prices are expected to pick up in the last quarter of the year with demand from Chinese smelters starting to pick up.

TVI Resource Development (Phils.) Inc. (TVIRD), the local unit of Canadian miner TVI Pacific, that ships nickel ore to China from its Agata nickel project in Agusan del Norte, believes demand and uptake from China would remain constant.

“Without needing to preempt market trends in the near future, I would say business is steady at TVIRD. Both demand and uptake remain constant,” said Kaycee Crisostomo, director of TVIRD’s corporate communications and planning.

“TVIRD’s shipping target (to China) is over two million tons. The target remains the same,” he added.

Part of the apprehensions that come with the devaluation of the yuan is the slowdown in the economy as a result of higher commodity prices.