* Says not taking new orders as already seeing too much
* Has no ambition to change long-term mining plan in favour
of higher grades
* Aims to produce 15 pct more ore this year, has contracted
to sell 15.3 mln T
By Melanie Burton
SYDNEY, Jan 22 Philippine nickel ore producer
Nickel Asia Corp is seeing a jump in enquiries after
neighbour Indonesia banned ore exports this month, but is sold
out and expects to benefit from the ban through higher prices,
senior executives said.
Indonesia halted exports of nickel ore on Jan. 12 in a bid
to force miners to set up downstream industries with the aim of
reaping more value from its mineral wealth.
"We already have too much demand as it is and we're not
taking new orders," Dennis Zamora, senior vice president of
Nickel Asia, told Reuters late on Tuesday. "I think we'll see
the effect in price, not in volume."
Buyers in China and Japan boosted shipments ahead of the
well-flagged ban. They are now searching for new sources of
supply, Zamora said.
"We've had more enquiries from Japan and China, mostly from
companies that are worried about where they will get future
supply of high grade ore," he said.
Nickel Asia is aiming to produce 15 percent more ore this
year, having contracted to sell 15.3 million wet metric tonnes
of limonite and saprolite ore, but it has no intention of
altering its long-term mining plan to favour higher grades,
Its shares on the Philippine Stock Exchange hit the highest
in seven months on Tuesday at 17.90 Philippine pesos ($0.40) a
share, up by a quarter from late December lows.
The ban has likely added around $2 to the average price of
ore in China and would fan London Metal Exchange nickel prices
this year, Zamora said.
LME nickel has already rallied around 10 percent on the ban.
Analysts at Goldman Sachs warned clients on Tuesday of a
potential spike to $18,000-$20,000 a tonne by year end.
LME nickel traded last at $14,755 a tonne.
China is the top importer of Indonesian ores, which are fed
into furnaces to produce nickel pig iron, a lower-cost
alternative to higher-quality nickel ores from Australia and
elsewhere for makers of stainless steel.
Philippine ore typically has lower nickel and higher iron
content, so switching feeds is not a simple or economic process.
But analysts say if Jakarta doesn't ease its ban, plants in
China and Japan may have no other choice, other than waiting for
new processors to spring up in Indonesia.
Yet some producers are holding out hopes rules may be
relaxed, Zamora said. The ban has forced tens of thousands out
of work and is heating up to become an issue for Indonesia's May
"What we have heard from our sources is that most likely
(the ban is) temporary, but it would take a bit of time to
change the law. So I think people are looking at possibly
between six months to a year, if the ban were to be overturned,"
China's stainless steel makers may turn to LME nickel
stocks, driving them down from record highs and supporting
prices, especially if the ban remains in place, Nickel Asia's
Chief Financial Officer Manny Samson said.
"The surplus could come down dramatically this year and we
could look at a deficit for next year," he said.
($1 = 45.2800 Philippine pesos)
(Editing by Muralikumar Anantharaman)