NAC projects better 2024 earnings

MANILA, Philippines — Listed Nickel Asia Corp. (NAC) sees better prospects next year in terms of profits amid the tightening of Indonesian nickel ore supply.

“We think by next year, there’s some potential for a better performance with potential revenue upside from a relief in nickel LME (London Metal Exchange) price amid the volatility we’re seeing,” NAC vice president for treasury, investor relations and sales Andre Dy said in an earnings’ call Monday afternoon.

He was referring to the impact of Indonesia’s tightening of its nickel ore supply, which has provided some relief in prices.

NAC president and CEO Martin Antonio Zamora earlier said they were seeing a recovery in nickel ore prices since bottoming out in the second quarter due to the recent tightening in Indonesian nickel ore supply.

The Philippines, particularly NAC, stands to benefit from Indonesia’s tightening policy since it is the closest neighbor with nickel supply.

“The tightening in terms of issuance of permits has driven for some operations in Indonesia to look for ore and the closest destination is the Philippines. We have received information that there were some cargos that were sold to big smelters in Indonesia,” Dy said.

Further, with the upcoming elections in Indonesia, the tightening policy on nickel ore supply is projected to persist, benefitting Philippine nickel supply. Indonesia is holding a general election in February 2024.

“Indonesian elections will take place early next year and until now, there has been indications that the tightening of supply in Indonesia may linger. There is still no visibility when the mining quotas or the equivalent of permit agency in Indonesia will speed up in their processes. One thing is for sure, there remains to be the elections that need to be resolved first. Once the ministers have been identified, we will have to see how it will impact Indonesia’s supply landscape,” Dy said.

Indonesia’s depleting nickel supply would also provide an upside to the Philippines, the NAC official said.

NAC is also working to address the heightened costs of nickel processing under Coral Bay Nickel Corp. (CNBC).

“Of course, if we address our challenges on the cost side and improve our efficiencies, we might be able to turn positive again,” Dy said.

“There are challenges on the CBNC cost side that we will need to address, and we think there are solutions that can be implemented to improve our operations,” he said.

As of end-September, NAC’s nine-month net income dropped 47 percent to P3.6 billion, mainly due to lower nickel ore prices amid higher Indonesian nickel production.

The company also said it recorded a loss of P379.8 million from its combined equity interests in the two high pressure acid leach (HPAL) plants – a turnaround from the P1 billion profit last year – due to lower nickel and cobalt prices year-on-year.

The group’s consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped by 31 percent to P8.5 billion due to lower revenues and losses incurred from its combined equity interests in the two HPAL plants.

The decline was also attributed to the higher production volume, which was tempered by a seven-percent reduction in cost per WMT resulting from productivity measures.

NAC said its revenues from the sale of ore declined by 15 percent to P16.8 billion on lower prices.

Its operating mines sold a combined 13 million wet metric tons (WMT) of nickel ore, which rose five percent year-on-year.

However, the weighted average nickel ore sales price decreased by 21 percent to $23.24 per WMT while the company realized P55.64 per dollar from nickel ore sales, up three percent from P54.22.