Zamora-led Nickel Asia Corporation (NAC) is planning to divest its stake in Coral Bay Nickel Corporation (CBNC), one of the world’s largest producers of nickel and cobalt, in favor of strategic partner Sumitomo Metal Mining Co., Ltd (SMM).

In a disclosure to the Philippine Stock Exchange (PSE), NAC said it is in discussions and negotiations with Sumitomo Metal for the proposed sale of all of NAC’s shareholding in Coral Bay, equivalent to 15.625 percent of the total outstanding and issued capital stock of CBNC.

Sumitomo Metal Mining Philippine Holdings Corporation holds a 26.04 percent stake in Nickel Asia, aside from its controlling stakes in CBNC and Taganito HPAL Nickel Corporation, in which NAC is a minority shareholder.

NAC added that “as a condition precedent for the proposed sale, NAC will engage a third party to conduct a valuation of the CBNC Shares.”

With the proposed sale of the CBNC shares, NAC said it has reclassified its investment in CBNC shares as available for sale and will no longer recognize equity gains or losses from its investment in Coral Bay.

“With the recent volatility in the nickel market, NAC has decided to revisit its growth strategy by divesting its minority shareholding in CBNC and focusing on its upstream mining and renewable energy businesses,” said NAC Vice President for Treasury and Investor Relations Andre Dy.

He noted that, “Over the last three years, the financial performance of CBNC was negatively impacted by increasing operating costs and weakening LME price. The divestment is seen to positively impact the NAC Group in furthering its ambitious growth and diversification objectives.”

Chinabank Capital Corporation Managing Director Juan Paolo Colet said “The domestic nickel mining industry has seen some pressure from lower ore and metal prices. For Nickel Asia, the sale of its minority stake in Coral Bay is an opportunity to exit the loss-making HPAL plant business and to redeploy capital to promising renewable energy investments.”

CBNC is a Hydrometallurgical Processing Plant (HPP) located in Rio Tuba, Bataraza, Palawan. It uses high-pressure acid leach (HPAL) technology that converts low-grade nickel laterite ores into nickel and cobalt mixed sulfide.

These intermediate products are further refined in Japan to become valuable components in the electronics, chemical engineering, and aerospace industries.

More importantly, these are used as battery material for electric vehicles, which contributes to the global goal of achieving a low-carbon future.

CBNC’s HPP Line 1 Project was established in 2002 and began commercial operation in 2005.

With favorable developments in the world market for Nickel, CBNC embarked on the construction of its HPP Line 2 Project in 2007 and began commercial operation in 2009. Initial investment was about $500 million.

NAC’s 60 percent-owned subsidiary Rio Tuba Nickel Mining Corporation (RTNMC), located beside CBNC in Barangay Rio Tuba, exports saprolite and limonite ore and supplies limonite ore and various non-mining services to the adjacent Coral Bay HPAL plant operated by CBNC.

Additionally, RTNMC holds a Mineral Production Sharing Agreement (MPSA) to quarry limestone, which is also utilized by CBNC.