Nickel miner Global Ferronickel Holdings Inc. said net profit in 2015 fell 77 percent to P1.1 billion from P4.8 billion in 2014 on lower production and the decline in the prices of the commodity in the world market
Global Ferronickel said in a disclosure to the stock exchange total volume exported in 2015 stood at 5.352 million wet metric tons, down 15 percent from the 2014 volume of 6.303 million WMT.
Exports of high and medium grade ore rose 288 percent and 83 percent, respectively, while low grade ore shipments dropped 84 percent.
“Our operations encountered unusually heavy rainfall during the months of June and August that affected ship loading activities due to the need to reduce moisture content to the desired level of 33 percent. This brought down total shipments to 99 vessels as compared to 117 vessels in the previous year,” the mining company said.
“In addition, the decrease in shipment volume was exacerbated by the decline in nickel ore prices from 2014 average of US$43.30/WMT to US$26.69/WMT average for 2015, lower by US$16.61/WMT or 38.4 percent,” it added.
Despite a very challenging environment caused by falling commodity prices, the company said it still managed to emerge as the second largest nickel ore producer in 2015.
Global Ferronickel plans to implement cost-cutting measures in 2016 to trim expenses on low fuel prices.
The company also reported that the results of its exploration efforts in Surigao would be completed in the second quarter of 2016, while Ipilan mine in Palawan was in the process of securing a permit.
“We expect the Ipilan mine to start producing within the fourth quarter of 2016 and it will complement the seasonal weather pattern of our Surigao mine providing us with a nickel production for the entire year. Our Ipilan mine will be a major contributor to our earnings in the future. So when Ipilan comes into operation, this will significantly increase our capacity to match the top producer in total ore export sales,” Global Ferronickel said.
The company earlier reported that it secured commitments on the delivery of a 4.5 million WMT in nickel ore for one year at spot prices to three Chinese firms.
The orders account for almost 90 percent of company’s target production for the year.
“This gives the company the assurance of good results for this year despite a challenging market environment for commodities. Most importantly, the company would remain to be profitable and have strong cash flow because of cost reduction measures and a better mix of higher quality ores,” Global Ferronickel said.