Profit Drop in the Face of Lower Ore Prices
Nickel Asia Corporation, the Philippines’ leading nickel producer, reported a significant decrease in its attributable net income for the first nine months of 2023. The company’s net income fell by 47 percent to P3.6 billion, down from P6.9 billion in the same period last year, primarily due to lower nickel ore prices influenced by increased production in Indonesia.
Revenue and Operations Overview
Revenue from ore sales also saw a 15 percent decline, totaling P16.8 billion, compared to P19.9 billion last year. Despite an increase in ore sales volume, with 13 million wet metric tons (WMT) sold, the company faced challenges due to lower nickel and cobalt prices and losses from its equity interests in two High-Pressure Acid Leach (HPAL) plants.
Price and Exchange Rate Fluctuations
The average price for exported saprolite and limonite ore dropped to $29.15 per WMT, compared to $38.87 per WMT in the previous year. The company also observed a decrease in the average price of limonite ore delivered to the HPAL plants. Consequently, the weighted average nickel ore sales price fell by 21 percent to $23.24 per WMT. However, the company realized a slight increase in the exchange rate for nickel ore sales, averaging P55.64 per US dollar.
EBITDA and Operational Efficiency
Nickel Asia’s consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to P8.5 billion, marking a 31-percent decline from the previous year. This was attributed to lower revenues and the losses incurred from the HPAL plants, despite a reduction in cost per WMT due to productivity measures.
Outlook and Expectations
NAC’s CEO, Martin Antonio G. Zamora, expressed optimism for a recovery in nickel ore prices, citing tightening supply in Indonesia and China’s economic recovery. He anticipates further price recovery by the end of the year.
Renewable Energy Ventures
Additionally, the company’s subsidiary, Jobin-SQM Inc. (JSI), reported a substantial increase in electricity generation and revenues, with plans to expand its solar farm operations. Greenlight Renewables Holdings Inc., a joint venture with Shell, has also commenced the construction of a solar plant, highlighting NAC’s diversification into renewable energy.