FNI to invest $50 M in steel processing plant

MANILA, Philippines — Listed Global Ferronickel Holdings Inc. (FNI) is investing at least $50 million to put up a steel processing plant as part of its diversification into other businesses.

FNI president Dante Bravo said $20 million would be invested as capital for the plant itself while another $25 million to $30 million would be used for the operations, including the importation of steel billets, the raw material for rebar steel.

“We are seriously looking at it because our local manufacturers cannot cope with the local demand. It is an opportunity for us,” Bravo said in a briefing following the company’s annual stockholders meeting yesterday.

The plant, which will be built in Luzon, is targeted to be operational by 2021 and will have a capacity of 600,000 metric tons of rebars per year.

“We are still looking at a location where we can properly manage the cost of power, the logistics, and the other economies of scale,” Bravo said.

FNI hopes to take advantage of the fast-growing steel demand in the country, propelled by local infrastructure developments. Once operational, the plant is is expected to supply at least five percent of the local market.

The second largest nickel producer in the country and the largest single lateritic mine exporter in the world, FBI has partnered with Hong-Kong based Huarong Asia Ltd. for the project.

For this year, FNI expects production volume to decline  to five million wet metric tons (WMT) from  5.71 million WMT in 2018 even with the opening of a new mine area at its Cagdianao site.

FNI recently opened up CAGA 3 which is expected to deliver 500,000 to one million WMT for the year.

“Opening up a new area means having to develop it, you cannot just mine everything immediately. We need advance development for that area to produce its intended capacity. Plus our CAGA 2 is dwindling in terms of reserves,” Bravo said.

“We have to move from one area to another to maximize our production capacity and have flexibility in our product offerings with the changing market conditions,” he said.

FNI’s mine site in Surigao is subdivided into seven Cagdianao areas. Up until 2018, the company had only been operating in two CAGA areas to support its nickel ore shipments.

Despite the expected lower production, FNI is looking at a better bottomline for 2019 as it maintains the export of high grade ores to compensate for the lower volume.

FNI saw its net income drop to P510 million amid lower production and higher taxes.

FNI is the second largest nickel producer in the country and among its subsidiaries are Platinum Group Metals Corp., Surigao Integrated Resources Corp., PGMC-CNEP Shipping Services Corp., and PGMC International Ltd.

The company’s nickel project covers over 4,300 hectares in Surigao del Norte, divided into seven contiguous laterite deposits.

FNI is covered by its mineral production sharing agreement for a period of 25 years and by with a maximum annual production volume of five million DMT.