Japan's Sumitomo eyes Philippines for nickel

Reuters

Posted at Mar 26 2012 02:26 PM | Updated as of Mar 27 2012 02:19 AM

TOKYO, Japan - Sumitomo Metal Mining Co., a major Japanese nickel producer, is looking to increase nickel supplies from New Caledonia, the Philippines and the Solomon Islands to make up for a potential supply shortage after Indonesia implements a ban on exports of unprocessed nickel from 2014. 

Japan's top two ferro-nickel producers, Sumitomo Metal Mining and unlisted Pacific Metals Co, are expected to take a major hit from the new rule, with Japan relying on Indonesia for more than 50% of its nickel supply. Ferro-nickel is used in making stainless steel.  

"We are talking with the Indonesian government if it's possible to export what it cannot process at home," Nobu Kemori, president of Sumitomo Metal Mining, told Reuters in an interview.  

"We believe that possibility is not low given a lack of smelter capacity in Indonesia, costs and time involved in building new smelters, including facilities such as power plants. But at the same time we are looking to increase supply from New Caledonia, the Philippines and the Solomons," Kemori said.  

Indonesia's ban on exports of some unprocessed metals, including copper, from January 2014 could lead to a scramble by  global consumers for minerals elsewhere, with the shrinking supply outlook ultimately supporting benchmark prices.  

In 2010, Japan imported 40,000 tons of nickel from Indonesia out of a total of 77,000 tons of imports, according to customs-cleared statistics.  

Imports of Indonesian copper made up 20 percent of Japan's total imports of 1.3 million tons. 

Kemori also said the firm's 63%-owned Taganito nickel project in the Philippines will launch production in July or August 2013, with output in 2014 seen reaching at least 27,000 tons, or 90% of its capacity.  

An attack by Maoist rebels late last year will push back the launch of the $1.3 billion project by a couple of months and raise the cost of by some $100 million, he said.