GLOBAL Ferronickel Holdings Inc., the second- largest nickel producer in the country and the largest single lateritic mine exporter in the world, said the income of its operating subsidiary, Platinum Group Metals Corp., fell to just P37.5 million last year, a fraction of its income of P1.11 billion on 2015.
Revenues reached P3.77 billion in 2016, down by half from the P6.53 billion it made in 2015, as a result of sluggish nickel-ore prices and poor weather conditions.
Over the course of 2016, 4.309 million wet metric tons (WMT) of nickel ore were shipped, down by 19 percent from the 5.352 million WMT shipped in 2015.
Average nickel-ore price decreased to $17.93 per WMT, 33 percent lower from the $26.69 per WMT average in 2015.
By sales value, medium-grade ores continued to have the highest contribution to total sales, but by shipment volume, the overall mix shifted toward low-grade ores from medium grade a year earlier.
The shift in the overall mix is a result of the company’s decision to delay shipment of higher-valued nickel-ore inventories following the drop of nickel-ore prices experienced during the first half of 2016, which continued to a lesser extent into the third quarter.
“As we enter 2017, we are delighted to see early signs of recovery in nickel-ore prices. That is why when we began operations this April, almost two-thirds of our shipment was medium-grade nickel ore with the remainder low-grade nickel ore,” said Dante Bravo, the company’s president. The company said it has undertaken various measures to remain profitable and maintain its position as a leading low-cost producer. One major initiative is the review and enhancement of the roles of mining contractors.
At the start of the 2016 mining season, the company took responsibility of barging operations and increased the number of mining contractors for greater flexibility and reduction of operational risks, thereby improving operational excellence and efficiencies.
“We expect continued drawdown in ore stocks in China to prompt price increases to ultimately balance the markets. More important, we are convinced the urbanization story remains intact and should support stronger demand growth for industrial-focused commodities such as nickel. We are confident our strategic initiatives coupled with positive long-term demand growth trends for stainless steel in China and other markets, as well as new uses of nickel in emerging technologies, leave us well positioned to make progress in the year ahead,” Bravo said.