With world prices of nickel sliding to almost a quarter of its previous levels, local firm DMCI Mining Corp. said it is mulling to propose to its Australian partner, Rusina Mining NL, to temporarily suspend their direct shipments from their mining site in Zambales.
Isidro Consunji, president of DMCI Holdings, the parent firm of DMCI Mining, said they will raise the plan with their foreign partner during a board meeting this week.
“Everybody is not buying,” Isidro said in an interview with reporters in a mining conference in Manila. He was referring to lower demand for unprocessed minerals from their usual buyers specially in China.
He added that they would propose to wait for the market prices to settle.
Nickel prices have slid from its high of about $50,000 per ton to current levels of about $12,000 as demand from nickel users such as stainless steel plants and nickel smelter in China have slowed down after the Beijing Olympics.
However, Rusina Mining's chief executive, Robert Gregory, told abs-cbnnews.com/Newsbreak in a phone interview that their Zambales mining operations will continue to operate.
"We can ship tomorrow if we want. No one is stopping us," Gregory said.
While Gregory confirmed that their overseas market "have contracted a lot," he said Rusina is still committed to sustaining their Zambales operations.
"We are here for the long term. We plan through ups and downs in this business, not just when the prices are high," he said.
With a long term perspective, Gregory said they are not constrained by price volatilities. He added that even if prices have dipped, "prices today are still double their levels two years ago."
Gregory said that they are not banking on direct direct shipment of unprocessed minerals from their Zambales sites. Instead, they are pursuing a nickel processing plant in Zambales where they could get more value from the nickel ore deposits. This will require them to invest in technology that would allow them to extract gold, nickel, and other precious metals from low grade ores.
"There is a lot of capital involved, but that is more sustainable. That is our direction," Gregory stressed.
The 50-50 joint venture between DMCI Mining and Rusina Mining inked in early 2007 was initially considered ideal since the Australian firm had the financial resources while the local firm had the local know-how, which is key in controversial mining projects in developing countries like the Philippines.
Besides the Zambales mines, DMCI Holdings, a major mining and civil contractor based and listed in Manila, has contracts in the right places. Among its other projects are the management of Semirara coal mine in the southern Philippines and the partnership with Hong Kong-based First Pacific Group on a water supply contract in Manila.
The Zambales mines are estimated to have nickel ore reserves of up to 33 million tons.
The joint venture, which tasked DMCI Mining to mine and ship nickel and chromite ore in the old Acoje mine located in Sta. Cruz, Zambales, started operations early this year.
Consunji said they have made seven shipments to China of about 350,000 metric tons (MT) worth $10 million.
Consunji said DMCI Mining has so far invested P300 million in the Zambales venture and has reported revenues of P442 million and net income of P45 million for the first six months of 2008.