MANILA, Philippines - Listed Global Ferronickel Holdings Inc. (FNI) has acquired for $50 million a nickel mine in Palawan to augment its operations in Surigao and double the company’s annual production capacity.
FNI, late Friday announced its acquisition of Southern Palawan Nickel Ventures Inc. (SPNVI), which owns at least 90 percent of Ipilan Nickel Corp., a company engaged in nickel mining in Brookes Point, Palawan.
The transaction covers the sale of 500,000 common shares and 6. 25 million preferred shares of SPNVI to FNI.
The Ipilan mine is projected to have an annual production rate of up to three million metric tons when ran on full capacity, doubling the company’s annual production capacity.
“The acquisition of Ipilan is strategic for the company because it will address the seasonality constraint of the Surigao mine,” said company president Dante Bravo.
The Cagdianao mine in Surigao operates only from April to October while the Ipilan mines would operate from November to July.
Putting the Ipilan mine into operation would help ensure the supply of medium and high-grade saprolitic ore to the steel market.
The Ipilan tenement covers 2,800 hectares, 800 hectares of which have already been explored for 66.5 million metric tons of resource.
Bravo said FNI intends to set the mine in operation next year. The company is awaiting the approval of its Declaration of Mining Project Feasibility (DMPF), the final document that must be issued by the Department of Environment and Natural Resources (DENR) before a mining project can commence operations.
FNI’s doubled production capacity would make it the second largest producer of nickel direct shipping ore in the country, next to Nickel Asia.
“We are very pleased to announce this new acquisition as it forms part of our growth strategy to minimize production downtime throughout the year. The company is very much on track with its plans to become a leader in nickel production in the country,” Bravo said.
Depressed and volatile nickel prices have affected the earnings of several nickel producers in the country.
FNI, however, is optimistic nickel prices and demand would improve in the last quarter of the year as demand from Chinese smelters are beginning to pick up.
“We think it’s (nickel prices) going to pick up towards the end of the year. China has been importing aggressively nickel and nickel pig iron. We expect it to be up in the last quarter,” said Bravo.
FNI used to ship nickel ore to both China and Australia but is now concentrating on the Chinese market.