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FNI’s net profit falls 97% to P37.5 million


By James A. Loyola


Global Ferronickel Holdings, Inc. reported that its subsidiary Platinum Group Metals Corporation (PGMC) reported that net income plunged 97 percent to P37.5 million last year from P1.11 billion in 2015 amid sluggish nickel ore prices and poor weather conditions.

In a disclosure to the Philippine Stock Exchange, FNI said revenues fell 42 percent to P3.77 billion for the full-year 2016 from P6.53 billion in 2015.

Over the course of 2016, a total of 4.31 million wet metric tons (WMT) of nickel ore were shipped, down by 19 percent, compared to 5.35 million WMT in 2015. Average nickel ore price decreased to US$17.93/WMT, 33 percent lower from US$26.69/WMT in the previous year.

By sales value, medium grade ores continued to have the highest contribution to total sales. But by shipment volume, the overall mix shifted towards low grade ores from medium grade a year earlier.

The shift in the overall mix is a result of the Company’s decision to delay shipment of higher valued nickel ore inventories following the drop of nickel ore prices experienced during H1 2016, which continued to a lesser extent into the third quarter.

“As we enter 2017, we are delighted to see early signs of recovery in nickel ore prices. That is why when we began operations this April, almost two-thirds of our shipment was medium-grade nickel ore with the remainder low-grade nickel ore,” said FNI President Dante R. Bravo.

FNI said it has undertaken various measures to remain profitable and maintain its position as a leading low cost producer. One major initiative is the review and enhancement of the roles of mining contractors.

At the start of the 2016 mining season, the Company has taken responsibility of barging operations and increased the number of mining contractors for greater flexibility and reduction of operational risks thereby improving operational excellence and efficiencies.

As a result, total contract costs — comprised of contract hire rates and barging costs dropped by approximately 30 percent per WMT.

“We expect continued drawdown in ore stocks in China to prompt price increases to ultimately balance the markets. More importantly, we are convinced that the urbanization story remains intact and should support stronger demand growth for industrial-focused commodities such as nickel,” said Bravo.

He added that, “we are confident that our strategic initiatives coupled with positive long-term demand growth trends for stainless steel in China and other markets as well as new uses of nickel in emerging technologies, leave us well positioned to make progress in the year ahead.”

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