Nickel producer eyeing switch to other minerals as prices drop

LOCAL NICKEL processor Platinum Group Metals Corp. is looking at venturing into manganese and chromite given the dampened demand and prices of nickel, a company official said.

"We are seriously considering multi-alloy production like ferro-manganese or ferro-chrome just to be able to utilize our plant and equipment," Platinum Group Senior Vice-President John H. Cabarrus told officials of the Mines and Geosciences Bureau.

Nickel prices for cash buyers have fallen to $4.36 per pound from $4.53 last month and $13.15 last year. The record high was $24 per pound in May 2007, data from the London Metal Exchange showed.

"We are conducting a lot of research and development .. [and] looking at costs and revenues we can generate [as a result of] converting to ferro-chrome or ferro-manganese," Mr. Cabarrus told BusinessWorld in a phone interview.

However, the company has to apply for an environmental compliance certificate from the Environment department for its new venture. The Platinum Group will submit its application next month, Mr. Cabarrus said.

Demand from the top market — the Chinese steel industry — has dropped by as much as 70% due to the economic slowdown, Mr. Cabarrus said. Ferro-nickel is a main ingredient in steel production.

Platinum Group has shelved its nickel processing plants in Iligan City in Lanao del Norte and in the town of Manticao in Misamis Oriental.

A total of 139 and 129 workers were retrenched from the Iligan and Manticao plants, respectively. Seventeen employees were left in Iligan and six in Manticao, Mr. Cabarrus said.

The company invested $20.59 million and $9.948 million to develop the Manticao and Iligan processing plants, respectively.

Early this year, listed Apex Mining Co., the Philippine unit of British miner Crew Gold Corp., laid off 150 of its 1,955 workers to save on development costs in its Compostela Valley gold mine in southern Mindanao.

Berong Nickel Corp., the local unit of London-based Toledo Mining Corp. PLC, ceased its Palawan operations last month amid dampened demand and rock-bottom prices of nickel, cutting 600 jobs and retaining less than 50 employees.

"Should there be improvement [in metal prices], we expect to resume our operations and production," Mr. Cabarrus said.

But despite the drop in demand, the Platinum Group wants to sell 350,000 to 500,000 wet metric tons of nickel ore, extracted from its 4,376-hectare mine in Surigao del Norte, to Chinese traders this year.

The company has a supply agreement with the BHP Billiton-owned Queensland Nickel, Inc.

Queensland Nickel is supposed to buy 800,000 wet metric tons of nickel ore this year.

The Platinum Group shipped nickel ore last Friday. It expects four shipments in April and another six to seven deliveries in May to October, Mr. Cabarrus. said. (Business World)

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