DENR allows suspended miners to ship out nickel ore

The Department of Environment and Natural Resources (DENR) has allowed eight suspended nickel ore miners to ship out stockpiles of mined ore, sources told Reuters, temporarily boosting supply from the world's top exporter of the raw metal after a major mining crackdown.

More than half of all mines in the Philippines have been ordered to permanently shut to protect watersheds in an eight-month campaign led by Environment and Natural Resources Secretary Regina Lopez.

Allowing the halted mines to sell their stocked nickel ore is aimed at limiting the potential build up of silt in nearby waters, an official with knowledge of the order said, rather than the government toning down its campaign.

The volume of nickel ore stocks from the mines may well exceed 1 million tons, or about a month's worth of consumption by top buyer China, said the official, who declined to be named because he is not authorized to discuss the matter publicly. The total would likely be less than 5 million tons, he added.

The additional Philippine supply could hit global nickel prices, which have been weighed on by renewed shipments from Indonesia, the previous top exporter, after it partially lifted a three-year ban.

Three-month nickel on the London Metal Exchange has fallen nearly 9 percent this month to trade at just below $10,000 a ton on Friday. That followed a 10 percent spike in February when Lopez ordered the mine closures.

Environmental hazard

In a memorandum issued on March 6, a copy of which was reviewed by Reuters, Lopez allowed the eight suspended nickel miners to remove their stockpiles from all mining areas.

The order also required the mines to put P2 million per hectare of disturbed land into a trust fund "to further mitigate the adverse impacts of the mining operations to the environment and to the affected communities."

The eight miners, including Hinatuan Mining Corp. – a unit of top nickel ore producer Nickel Asia Corp. – were among 10 suspended for environmental breaches during a July-August audit of the nation's 41 mines.

Lopez last month ordered 23 mines closed for good, including six of the eight suspended nickel producers.

The suspended miners had asked Lopez's permission to remove the mined ore and "they were allowed and that means they can dispose the ore, ship it out," said the first official.

"It's an issue of environmental hazard. If we don't allow it, then it will just be a hazard. So it needs to be removed," the official said. Another official with the environment agency confirmed the mines can ship out the ore.

Nearly all of the Philippines' nickel ore is sold to China where it is used to produce stainless steel. Philippine shipments reached 30.5 million tons last year, or 95 percent of China's total imports of the raw material.

Lopez, currently in the United States, did not immediately respond to a request for comment on her March 6 order. A spokeswoman for the environment department did not comment.

Two of the suspended mines are owned by construction-to-power firm DMCI Holdings Inc., which was planning to restart the mines this month while it awaits the outcome of an appeal, in a test of rules around the crackdown.

Hendrik Martin, manager at DMCI's nickel mine in Zambales province, said the company had received the order from the environment agency and would likely sell its 200,000 ton stockpile to China.

DMCI Mining Corp. President Cesar Simbulan separately said stockpiles at its Berong Nickel Corp. in Palawan province stand at around 1 million tons. Hauling of the stocks from the Zambales and Palawan mines to the ports has yet to start, he added. — Reuters