Nickel rose a second day, heading for the highest close in a year, as President Duterte indicated he wouldn’t balk in enforcing a pledge by the government of the world’s biggest supplier of nickel ore to clean up its mining industry.
Duterte told mining companies to comply with environmental standards or close. Six miners, accounting for 8 percent of last year’s production, have shuttered so far.
“Nickel is supported by the Philippine stories,” Richard Fu, head of Asia and Pacific at Amalgamated Metal Trading Ltd. in London, said by e-mail.
The metal for delivery in three months rose 0.9 percent to $10,830 a metric ton by 10:21 a.m. on the London Metal Exchange (LME). Prices have surged 28 percent since the start of June on concerns mines closing in the Philippines will hurt supply. Inventories of the metal in warehouses tracked by the LME fell for a fourth day to the lowest since October 2014.
Duterte ratcheted up pressure on the country’s miners, the world’s biggest suppliers of nickel ore, telling them either to comply with international environmental standards or shutter. Nickel prices headed for their highest close in about a year.
“You obey or we will survive as a nation without you,” he told a briefing in Manila on Monday, saying the country can live without the revenue from mining.
Duterte and his environment chief, Regina Paz L. Lopez, have unleashed a campaign to clean up mining in the Philippines and vowed to close operations if a government audit shows they fail to meet the required norms. The country is the top supplier of nickel ore to China, where the material is used to make stainless steel.
“I can forego the P40 billion [$850 million] I collect from you guys,” said Duterte, who took office on June 30, referring to mining companies. “The Filipinos will survive without you.”
Duterte defended his environment secretary. “You try to castigate Gina Lopez for being strict and yet you destroy the land, destroy the soil,” he said, without identifying anyone. “You get rich at the expense of our native land. Do not do it. I will not allow it.”
The Speaker of the House of Representatives, Pantaleon Alvarez, last week floated a proposal for an export ban on raw ores to spur domestic processing. While that would echo a move by Indonesia in 2014, lower ore grades in the Philippines and smaller reserves would hamper investment, according to David Wilson, director of metals research and strategy at Citigroup Inc.
Mines Shut
In other move on Monday, Duterte appointed Mario Luis Jacinto as director of the Mines and Geosciences Bureau, replacing Leo Jasareno, the agency said on its website. Jacinto will assist Lopez in reviewing and evaluating mining permits and clearances.
Six nickel miners that have already been shut by the Environment Department represented 8 percent of national output in 2015, Jasareno said in a phone message last week. Nickel Asia Corp. and Global Ferronickel Holdings Inc., the country’s top two producers, have said they operate according to standards demanded by the new regulator.
Futures Surge
Prices on the London Metal Exchange climbed 13 percent in July and 12 percent in June on concern over the clampdown. The campaign means a quarter of the country’s nickel mine output could be lost for the next six months, sending prices to $12,000 a metric ton, according to Goldman Sachs Group Inc. The metal advanced for the second day on Tuesday, rising 0.6 percent to $10,795.
Some $20 billion to $30 billion of mining investments have been lined up over the next five to 10 years, including the Tampakan copper-gold project in South Cotabato province. Lopez has already said she won’t allow Tampakan to start operations.
In other metals:
Zinc was set for its highest close since May last year, climbing 0.5 percent to $2,278 a ton. Open interest, or the number of outstanding futures contracts, rose for a fourth day to the highest since October, according to LME data. Lead rose 0.2 percent. China’s government is conducting environmental checks in eight provinces in a move that may hurt secondary output involving small smelters, researcher SMM Information & Technology Co. said last week.