Global Ferronickel Holdings, Inc. (FNI), through its operating arm in Surigao del Norte Platinum Group Metals Corporation (PGMC), committed to ship as much as 1.3 million wet metric tons (WMT) of nickel ore to Baosteel Resources International Co. Ltd next year.
In a regulatory filing to the stock exchange, FNI said on Wednesday that from 1 million WMT in 2020, its annual supply agreement with Baosteel Resources has been expanded to 1.3 million WMT for the 2021 mining season.
This is on the back of “quick economic recovery in China”, said FNI President Dante R. Bravo.
“Against other countries, China was able to respond well to this pandemic and manage its economy in an unprecedented manner. The economic growth in China will further accelerate in the coming year as there are recent announcements that vaccine would soon be available. Given those prospects, we are very bullish in the nickel space,” Bravo said.
To recall, it was in China, the Philippines’ top market for nickel, where COVID-19 pandemic has started.
Baosteel Resources is a wholly owned subsidiary of the top Chinese steel manufacturing corporation China Baowu Steel Group and is engaged in the business of mineral resource investment, trading, and logistics services.
The company highly specializes on trading of metallurgic raw material, with an annual volume of over 60 million tons covering a vast range of products such as iron, ore, coal, alloys, non-ferrous metals, ferrous scraps, metallurgical flux, etc.
Should stockpile inventory permit, half of FNI’s shipment to Baosteel Resources next year will be composed of low-grade nickel ore with 0.90 percent nickel content and 49 percent iron content.
The rest would be medium- to high- grade nickel ore with 1.30 percent to 1.80 percent nickel content and 15 percent to 25 percent iron content.
Delivery is expected to commence in April 2021 when the dry season starts, and the selling price of each shipment will be set on a monthly basis according to the prevailing market price at the time of price setting.
When it comes to output, and despite the pandemic, companies have remained bullish about the Philippines’ nickel industry for this year and for next year.
Philippine Nickel Industry Association (PNIA) Board Member Isidro Alcantara, Jr. said the country, considered as the world’s top nickel producer and one of the most highly mineralized countries globally, may still end up with the same output of 40 million to 45 million WMT of nickel ore this year.
Moreover, nickel mining firms may even book higher earnings on the back of much improved world prices.
“In 2019, we exported 40 million to 45 million WMT. The expectation is it will be lower for this year, but considering that the nickel mining prices, which is through the roof, I hope nickel mines will take advantage of the prices. The same volume is possible this year,” Alcantara, who also serves as the president of nickel mining firm Marcventures Holdings, Inc., added.
For next year, he said that the industry “hopes our luck continues”, citing positive outlook on the economy of China.