An Optimistic Future for Philippine Nickel Export

The Philippines shipped $1.34 billion worth of Nickel ore in 2020, making it the world's highest exporter of Nickel ore by value. Nickel ore was the Philippines' ninth most exported product that year. The Philippines send the majority of its Nickel Ore exports to China ($1.3B), Japan ($36.9M), the United Kingdom ($1.52k), and Brazil ($105).

The Mines and Geosciences Bureau said that the Philippines, rich in Nickel, produced 386,359 tons of Nickel in 2018, an increase of 17% from the previous year's output and the highest production in six years, adding to the "positive" prognosis for a sector enjoying a financial bonanza from high prices.

For the period of 2019–2020, the three fastest-growing export destinations for Philippine Nickel Ore were China ($725M), the United Kingdom ($388M), and Brazil ($105M). As Indonesia attempts to build a whole supply chain that includes processing of the metal used in stainless steel and batteries for electric vehicles, China has turned to the Philippines as its primary supplier of Nickel ore as of 2020.

Metals prices may be high, but local industries still face difficulties like inflation, labor shortages, supply chain disruptions, and possibly even higher freight costs.

As a result of the Indonesian export prohibition, miners and producers of Nickel in the Philippines can look forward to increased production as they capitalize on expanding demand from China, where the rising popularity of lithium-ion batteries and stainless steel is predicted to boost the country's Nickel consumption. China's Nickel demand is projected to increase to more than 2.1Mt in 2023, up from an anticipated 1.6Mt in 2019.

The Philippines' Nickel output is projected to grow by 3% in 2019 to 355 kt and then to 381.4 kt in 2023. The Acoje and Mindoro projects, with a combined Nickel production capacity of 38kt, are set to begin operations in 2021 and 2023, providing necessary support.

Nickel prices around the world are expected to increase as supply becomes more limited. Price of Nickel has increased throughout 2019 to a 56-month high of US$15,748/t in August 2019, following a severe decrease throughout the second half of 2018 due to the intensified US-China trade conflict. If the prohibition is enforced, it will give the Nickel industry in the Philippines the boost it needs to rebound from the effects of the government's regulatory measures and advance new capacity.

As a supplier of Nickel, the Philippines is second only to Indonesia and contributed for roughly 16% of global output in 2018. When the country's Department of Environment and Natural Resources began auditing more than 40 metals mines in 2016, production quantities dropped significantly. Over 100kt of output was lost as a result of the government shutting down 27 mines, 19 of which were producing Nickel, for failing to meet technical, legal, social, and environmental laws. Since 2016, when a number of regulatory measures were imposed across many operating mines, the Nickel industry in the Philippines has suffered from an annual decline in production of 28.5%.

Meanwhile there are some sectors that are looking to proactively shift Philippine Nickel trade into a potentially more lucrative, but more investment-heavy and environmentally risky, direction. In order to capitalize on the growing demand for electric vehicles, a local expert has recommended that the Philippines stop exporting raw Nickel and construct at least two ferro-Nickel smelters.

Graciano M. Calanog Jr., a mining engineer, recently told the BusinessMirror that the Philippines can make the most of its abundant Nickel resources by constructing a ferro-Nickel smelter. According to Calanog, the nation's Nickel reserves are second only to those of Norway.

Calanog argued that this would help the country advance towards its objective of becoming an industrialized nation. He predicted that within a decade, the Philippines might become an industrialized nation if smelters were constructed and Nickel were processed before being exported.

Having an electric battery facility and an electric vehicle [business] would be beneficial. Indonesia is almost ready to begin producing their own automobiles. Calanog predicted this weekend in the BusinessMirror: "Soon, they will exceed us." It's a shame that we're wasting Nickels like this. However, there is a catch to constructing a smelting facility: you'll require a steady supply of coal-based power. Calanog said that renewables can't be utilized to make ferro-Nickel since carbon is a necessary component of Nickel's mineral makeup in our current, oxygen-rich atmosphere.

Research by Calanog found that there are only two High Pressure Acid Leach (HPAL) processing plants and no ferro-Nickel smelters in the Philippines. No news has surfaced about any potential electric battery or electric vehicle plant that would be established in the Philippines by international investors. 

Hallmark Mining Development is a producer of Nickel and Nickel manufacturer in the Philippines. Despite its already considerable investment in mining and extraction operations at the Pujada Nickel Project, it is also looking closely in the development of smelting facilities in the Philippines to become a more competitive and sustainable producer of Nickel to the world market.

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