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DMCI Holdings suspends mining operations

abs-cbnNEWS.com | 07/01/2009 8:15 PM

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Consunji-owned DMCI Holdings Corp. told the Philippine Stock Exchange on Wednesday that its nickel mining subsidiary has suspended mining operations in Zambales.

The company did not say the reason for implementing the suspension but market sources said it is primarily because of the decline in nickel prices in the world market.

DMCI Mining Corp., the mining unit of DMCI Holdings, and Australian partner Rusina Mining Ltd. operate a nickel laterite project in Zambales.

As early as last year, DMCI president Isidro Consunji already hinted of the possibility of suspending the nickel project because of unfavorable metal prices.

So far, the joint venture partners have shipped 350,000 tons of nickel to China, earning $10 million. The amount was way below the $300 million invested by DMCI in the mining project.

Consunji, however, is not worried about the investments made by the company since most of the capital was used to purchase heavy equipment such as tractors and trucks, which the company can use for its construction business.

Prices of nickel in the world market have been dropping because of oversupply and the weakening global economy. From a high of $34,000 per metric ton in 2006, nickel prices last year dropped to below $13,000/MT.

Nickel is primarily used in the production of stainless steel and other corrosion-resistant alloys. Nickel is also used in coins to replace silver, in rechargeable batteries, and in electronic circuitry.

During the first quarter of the year, DMCI Mining posted a net loss of P10 million, a reversal of the P1.5 million net income it posted in the same period last year.

"Although the current situation for the nickel business looks bleak, the company believes that when opportunities to the nickel commodity market, DMCI Mining is well positioned to react immediately with its already existing partnerships and nickel mining experience," DMCI said in its first-quarter financial report.