Nickel mining companies in western Australia may benefit from the tense situation in China and the Philippines.
Since Indonesia banned the export of laterite nickel ore, the Philippines has been the main source of China's low-grade laterite nickel ore, which is used for China's production of nickel pig iron, accounting for over 20% of global nickel production.
China's nickel ore imports from the Philippines have been threatened, with severe weather leading to a 30% decrease in ship shipments in the first half of the year. Secondly, there is a threat from the Minister of Environment after the change of government. Environment Minister Gina Lopez has suspended five mines with the aim of reviewing whether mining operations comply with environmental protection laws. Some mining operations may pass the review, and new mining projects will not be approved to guide the end of the open-pit mining review. At the same time, the new mining tax system is being revised.
In the past month, the above news has driven up the price of nickel by $1500 per ton, reaching $10365 per ton over the weekend.
More problems may come one after another. The nickel price trade in the Philippines is seasonal, with shipments from April to September each year, and production is suspended for the remaining time due to the rainy season.
This year, the weather change is prolonged due to the La Niña phenomenon. Even if the government does not force more mines to close, nickel ore buyers may still be difficult to obtain enough low-grade laterite nickel ore.
China has obtained laterite nickel ore from New Caledonia or other regions, but the amount is relatively small. Although Indonesia has forced nickel mining companies to process and make some progress, the supply is still insufficient.
During this period, nickel mining companies in western Australia may become true winners. Investors are desperate to invest in western Australia, with shares rising by $2 per ton in April, and the investment has already achieved results. The Nova nickel mine of the Independence Group may resume production in a gradually improving market situation.