UPDATE 1-Philippines H1 nickel ore output rises 3% despite mine shutdowns

* Sixteen of 31 nickel mines reported zero output

* Suspension order on 3 mines lifted - govt official

* Two other suspended mines may soon resume operations

* Fitch sees modest Philippine ore output in 2019-2028 (Adds updates on mine suspensions, comments)

MANILA, Sept 10 (Reuters) - Nickel ore output in the Philippines, one of the world’s top two producers of the material for stainless steel and batteries, rose 3% in the first half, government data showed.

Output was capped as half of the country’s mines were closed for maintenance or environmental reasons.

The Philippines sells most of its nickel ore to top buyer China. It produced 11.31 million dry metric tonnes of the material between January and June, compared with 11.01 million tonnes in the same period last year, the Mines and Geosciences Bureau (MGB) said on Tuesday.

The Philippines and Indonesia are the top two producers globally.

Sixteen of the Philippines’ 31 nickel mines were shut in the first half for either maintenance or suspension of operations for environmental and other offences, the MGB said in its quarterly industry report.

The Department of Environment and Natural Resources (DENR) last year issued a resolution suspending the operations of several mines, including some nickel producers, following audits to assess their compliance with environmental regulations.

The DENR lifted the suspension order on three mines over the past nine months, while the MGB has recommended the same action for two others, Environment Undersecretary Analiza Teh said in a speech at a Philippine mining conference on Tuesday.

Five other mines suspended have yet to comply fully with the requirements for lifting the suspension, she said.

“We expect output in the number one global producer, the Philippines, to begin to rise in 2019 as some of the currently suspended mines become operational,” Fitch Solutions Macro Research said in a note.

Last year the Philippines’ nickel ore output dropped 4% to 25.9 million dry metric tonnes, putting it behind Indonesia. It retook the top spot in the first half of this year.

Fitch expects nickel ore output in the Philippines “to remain modest over the coming years due to a stringent regulatory environment and high levels of policy uncertainty, which will constrain project development”.

It forecasts average annual growth of 2.5% in Philippine output over 2019 to 2028.

Philippine nickel miners are likely to boost ore production next year, but may still not be able to fill up a supply gap to be created when Indonesia halts its ore exports, industry executives have said.

Indonesia has decided to stop nickel ore exports from Jan. 1, 2020, two years earlier than initially flagged as it speeds up efforts to process more of its resources at home. (Reporting by Enrico dela Cruz, Editing by Sherry Jacob-Phillips and Susan Fenton)