MANILA, Philippines — Philippine nickel mining output is expected to recover in 2019 following years of decline due to production disruptions, boding well for the global outlook for this year, a Fitch unit said Friday.
The Philippines is among the world’s biggest supplier of nickel ore and also among the top producers of copper and gold. However, the mining sector contributes less than 1 percent to the country’s economy.
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In a research note, Fitch Solutions said nickel mining production in the country will likely begin rising this year, with currently suspended mining operations in the country seen to obtain a license to resume operations over the coming months.
“We expect Philippine production to slowly rise over the coming years as currently suspended mines become operational once more. We expect nickel production in the country to average 1.7 percent y-o-y growth over 2019-2028,” the Fitch unit said.
“Domestic miners, SR Metals, Global Ferronickel, Nickel Asia Corporation and CTP Corp, will account for the vast majority of nickel production in the country,” it added.
“Nickel Asia, in particular, will remain the driver of nickel production in the Philippines, especially as its Taganito and Cagdianoa mines, the first and second largest in the country respectively, have not been hit by the recent closures and suspensions.”
Based on Fitch Solutions’ estimates, production in the Philippines declined by an average of 22.7 percent from 2016 to 2018 as a result of the banning and suspension of open pit mining on environmental grounds.
In 2017, former Environment Secretary Gina Lopez carried out a series of reviews and ordered the closure or suspension of many of the country's 41 nickel mines for threatening public health and the nature. Lopez’s campaign against miners cost her the job after her appointment was rejected by a congressional panel.
She was replaced by former soldier Roy Cimatu. Open-pit mining under Cimatu is no longer banned but suspended indefinitely until the affected miners take measures to redress environmental compliance failures.
In the same report, Fitch Solutions said a return to positive production growth in the Philippines and the ongoing supply recovery in Indonesia should boost global nickel production despite subdued performance in major markets including Canada, Australia and Russia.
“We forecast world nickel production to grow by an annual average rate of 3.5 percent over 2018-2027, slightly slower than the 3.7 percent average rate achieved during 2008-2017, which was boosted by higher nickel prices at the time and strong Indonesian output before the export ban in 2014,” the macro research firm said.
“By 2027, we expect global annual nickel production to reach 2.9mnt. Indonesia surpassed the Philippines as the largest global producer in 2017 and will remain so in the years to come, as stringent environmental regulations and policy uncertainty continues to limit output in the latter,” it added.