Global Ferronickel posts 83% income drop in H1

MANILA, Philippines - Listed Global Ferronickel Holdings, Inc. registered an 83 percent drop in its net income in the first half of the year on lower nickel prices and bad weather conditions for mining during the period.

The company generated a net income of P153 million in the first semester compared to P898 million the prior year. Gross sale for the period was placed at P1.793 billion as compared to P2.932 billion a year ago.

The total volume of nickel ore sold by the company was only 1.561 million wet metric tons (WMT) as against 2.110 million WMT in the same period last year.

In the month of June, the company was only able to finish loading seven vessels against a budget of 17 vessels due to continuous rains.

“Weather permitting, the company could have matched the 2014 shipment volumes which were all bound for China,” FNI said.

The lower shipment volume was accompanied with lower realized prices of $26.84 per WMT as compared to last year’s average prices of $43.89 per WMT for the same period.

FNI said its total costs and expenses of P1.501 billion were “under control” and were lower by 24 percent year-on-year.

“The company believes that the current soft nickel ore prices remain challenging. But given the company’s large reserve base, it has flexibility to maintain profitability by managing its product mix and costs. We are not in a hurry to push volume. Should prices remain at current levels, barring any unforeseen circumstances, we are confident that the company would remain profitable in the second half of the year. We have a higher number of operating days in the second half than what we have in the first half due to better weather conditions,” said company president Dante Bravo.

The company recently acquired for $50 million a nickel mine in Palawan to augment its operations in Surigao and double the company’s annual production capacity.

The company bought Southern Palawan Nickel Ventures, Inc. (SPNVI), which owns at least 90 percent of Ipilan Nickel Corp., a company engaged in nickel mining in Brooke’s Point, Palawan.

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 considered strategic for the company because it would address the seasonality constraint of the Surigao mine.

The Cagdianao mine in Surigao operates only from April to October while the Ipilan mines would operate from November to July.