NICKEL miner Global Ferronickel Holdings Inc. said it is not acquiring new mines for now, as company funds remain tight. However, the company said it is still pursuing its follow-on offering when the market starts to recover.
Dante Bravo, the company’s president, said the company cannot do a follow-on offering at a time when there is volatility in the stock market, which saw the main index reach as low as 6,084 points.
“But if there is a good opportunity for mergers and acquisition, then why not? But if you say you’re going to exhaust your funds to buy new mines, that might not be a good idea,” Bravo said, adding that the company will focus on its two mines in Surigao and in Palawan.
“And as soon as the market improves and there will be a good opportunity for us to have new funds, then we will expand to other metals,” Bravo said.
Unlike its competitor, Nickel Asia Corp., the country’s largest producer which is expanding to other businesses like power, Global Ferronickel will concentrate on mining activities, but is looking at diversifying to other metals like copper and gold, Bravo said.
He said prices of these commodities seem to bottom out at the world market, but it still needs five to 10 years before prices start to go up.
“We think that over the long term, prices of other metals like gold and copper will start to recover. But you have to position yourself ahead of that,” he said.
For now, Bravo said the company is still looking at the long-term prospects of nickel mining since it is their core business.
Indonesia may not export its nickel ore to China any more. Indonesia started its export ban on nickel in 2014.
China, the world’s second-largest economy, has no nickel-ore deposits and rely on the Philippines on their supply needs. Its economy, however, is weakening, pulling down the prices of nickel in the world market. As a result, mining firm like Global Ferronickel and Nickel Asia struggle to make a profit.
“We do not expect Indonesia to sell nickel ore, because in the long term, they would be producing nickel products, but that means it would be competing with big markets like China. So for now, it would just be the Philippines [supplying China with nickel ore]. We still have a big opportunity to expand in the nickel market. We have relatively a big market to supply our ore,” Bravo said.
Global Ferronickel was supposed to raise as much as $600 million from share sale last year, but shelved the plan in July, citing volatile market conditions. It vowed to push through with the plan of just raising $300 million this year, but the company did not give a definite schedule.
In August the company bought Southern Palawan Nickel Ventures Inc. for $50 million. That company, in turn, owns at least 90 percent of Ipilan Nickel Corp., which has a mine in Brookes Point, Palawan.
The company said it will start the Palawan mine, which will contribute 20 percent to 30 percent of the company’s profit, by November this year.
Global Ferronickel said its income for the third quarter plunged to P797 million, down by 80 percent from last year’s P3.92 billion.
It mitigated the low-price environment with shift in production to more of the middle-grade, low iron-nickel ore.