Nickel Asia Sets ₱4.5-B CapEx

Nickel Asia Corp. (NAC) has set a capital expenditure (CapEx) of P4.5 billion this year as it eyes higher production and shipment of nickel ore to meet the rising global demand for the green metal.

Photo Insert: NAC is confident its production can exceed last year’s figures in 2023.

“For the mining business, we’re looking at a CapEx of up to P4.5 billion. This is more than last year’s P2.5 billion,” NAC vice president for treasury, investor relations, and sales Andre Dy said during the company’s earnings call.

NAC ended 2022 with a net income of P7.93 billion, up 1.5% from P7.81 billion a year earlier with higher nickel ore prices offsetting the lower production, which was due to inclement weather.

For this year, NAC is confident its production can exceed last year’s figures. “We are optimistic that we can hit a production target of more than last year’s 15.9 million wet metric tons (WMT),” Dy said.

“The nickel shipments were lower versus 2021 because of the weather in the Philippines As the weather improves, we expect imports to return to pre-2022 levels,” he said.

In 2021, NAC sold a total of 17.94 million WMT. Driving this optimism is the projected dryer weather this year due to the El Niño phenomenon. “What we understand is weather is expected to be dryer this year than last year,” Dy said.

Last week, PAGASA issued an El Niño Watch, which is implemented when conditions are favorable for the development of El Niño within the next six months and the probability is above 55 percent and above.

PAGASA said El Niño “will likely develop in July-August-September 2023 season and may persist until 2024.” But even without El Niño, NAC has put in place measures to ensure continuous production and shipment from its mines.

“Even if that’s not the case, we are implementing measures to hedge these risks through operations. For example one of the things we're doing is increasing our stockpile volume. Even if there is heavy rainfall in the times when it’s not raining, we can source ore from our stockpiles,” Dy said.

Company officials declined to give earnings guidance due to the volatility in nickel prices.

“With regards to nickel prices, it’s also hard to give guidance given the behavior of nickel prices and the circumstances surrounding the steel market. So we will stick with shipment volume guidance,” Dy said.

However, China’s reopening coupled with the nickel demand for EVs could bump up prices this year. “There are factors, such as the reopening in China and its positive impact on the economic recovery there, which would accelerate towards the second half of 2023 and may provide a relief for class 2 nickel prices,” Dy said.

“Recovery may offset slowing growth in the US and Europe, coupled with continuous demand for EVs, we think this is positive for nickel prices in the long term,” he said.

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