Gov’t urged to incentivize downstream nickel processing

Martin Antonio G. Zamora, president and CEO of Nickel Asia Corp.

Imposing a ban or tax on the export of raw ore is not the solution to attract middle to downstream nickel processing in the country, but the granting additional incentives to investors, according to a top industry player.

Martin Antonio G. Zamora, president and CEO of Nickel Asia Corp. (NAC), the country’s lone nickel mining company with a processing operation of its raw ore, said during a media round table that incentives may be granted in the form of additional tax breaks on top of what has been given to manufacturing firms at present to attract more downstream processing operations.

“Instead of a ban, just provide more incentives for companies to build those plants,” said Zamora.

Earlier, Trade and Industry Secretary Alfredo E. Pascual said the Board of Investments (BOI) is studying whether to ban or impose a tax on the export of raw ore to encourage further processing of the green metals in the country to be able to produce electric vehicle (EV) batteries and participate in the huge EV global value chain.

The DTI is also looking at the Indonesian model, which banned its exports of nickel ore, to push  for the development of its nickel industry and exports high value added products.

But Zamora also stressed that the most meaningful incentive government can give to nickel processors and the mining sector is further easing of doing business in the country.

“Yes incentives, but not necessarily taxes, but easier streamlined processing. Make it easier the process of acquiring permits, that is more the issue than tax itself,” he said.

In the case of the NAC, which nickel mines contribute 11.9 million dry metric tons or 36 percent of total nickel production in the country in 2021, they normally process 100 permits a month. “We have a lot of companies and we monitor our compliance,” he said.

Zamora complained on the volume of requirements needing approvals from the highest down to the barangay level for clearances.

He said the government can make it a project for national for getting projects done. He said that taxes on mining firms can be centralized to be distributed to different beneficiaries. At present, mining firms are dealing with different parties and agencies.

Zamora noted that Indonesia, the world’s major nickel producer, has put up a one-stop shop center in an industrial park to make permitting process easier.

On the planned ban on nickel ore exports, Zamora said such move may not necessarily encourage many investors to invest into the country to build processing plants. There could be one or two plants that may invest  given the capacity of the Philippine resources. The Philippines is the fifth largest nickel producer globally.  

On one hand, he said, the country may also be missing out on export revenue stream. A large majority or 90 percent of the country’s raw nickel exports go to China.

NAC, in partnership with Sumitomo Metal Mining Co., Ltd., has also been weighing further opportunities in the EV industry as Zamora acknowledged strong potential that its existing nickel processing operation that employs the High-Pressure Acid Leach (HPAL) technology presents.

At present, the partnership has two HPAL plants: one in Rio Tuba where it owns minority shares of 10 percent and one in Taganito where it also owns 15.6 percent of the Coral Bay Nickel Corp. in Palawan.

He explained that their current HPAL plants in the country produce mixed sulfide where nickel is already at 55 percent from only one percent. The mixed sulfide is exported to Japan where it goes further processing to make it almost pure nickel to be used in the production of EV batteries.

“Moving forward that is an interesting area for us to pursue,” said Zamora, who said that it costs them $1.6 billion to build the 30,000-ton HPAL plant in 2012.

To build a third new HPAL plant would require a mining site with at least 100 million ton of nickel reserves to be able to feed the HPAL processing plant. “So, it cannot be a small mine, but large,” he pointed out. The plant should also be adjacent to the mineral deposits.

“We’re looking at opportunities whether it us or in our own areas or other areas that are not yet ours,” he added.

Time is also of the essence because nickel analysts are forecasting of nickel shortage by 2005 or 2027, at the latest. Since it will take three years to build a plant, Zamora said, investors in nickel processing should be starting this year or next year.