The Philippines has ordered the suspension of 20 more mines for environmental violations, as the world’s top supplier of nickel ore vowed to pursue stricter standards than in global mining centers such as Canada and Australia.
Most of the mines were nickel producers and the news sent global prices up more than 1 percent on Tuesday, helping the metal recover from earlier losses amid worries over disruption of supply to the important Chinese market.
President Rodrigo Duterte has warned that the Philippines could survive without a mining industry and 10 mines have already been shuttered as part of an audit completed last month.
“I am not against mining but I am definitely against the adverse effects that may happen, that are happening in some of the situations,” Environment and Natural Resources Secretary Regina Lopez told a briefing.
If the additional mines recommended for suspension are halted, it would bring to 30 the number closed, 18 of them nickel producers that account for 55.5 percent of the country’s total nickel ore output based on last year’s production.
Each miner would be handed the audit report and given seven days “to explain their violations”, Environment and Natural Resources Undersecretary Leo Jasareno said.
The agency would review the responses and decide whether to impose the suspension, he said, adding that miners would be able to appeal.
The threat of more mines being halted underpinned nickel on the London Metal Exchange, with prices up 1.5 percent at $10,685 a tonne by 0853 GMT, after falling as much as 2.8 percent. [MET/L]
The mine closures would result “in nickel ore stocks falling to very low levels by March/April 2017, driving a substantial rise in ore prices and thus marginal costs of nickel production over the next 3-6 months,” Goldman Sachs analysts said in a report released before Tuesday’s announcement.
Ronald Recidoro of the Chamber of Mines of the Philippines raised concerns that the audit “was done in a punitive manner rather than objectively”, and questioned the grounds for suspensions.
“Some of the grounds that were cited (for violations) were manageable and can be remedied in seven days but the rest are vague,” Recidoro said by telephone.
Jasareno said 11 of the nation’s 41 mines had passed the audit including those owned by top nickel ore producers Nickel Asia Corp and Global Ferronickel Holdings Inc.
“There were miners that passed (the audit) and I want to work with them to push it further, better than Canada, better than Australia. We must be better and I know it can be done,” Lopez said.
Global Ferronickel President Dante Bravo said the potential additional closures were “a great setback”.
Among those ordered suspended were nickel miners Marcventures Mining and Development Corp and Carrascal Nickel Corp.
OceanaGold Corp, the top gold miner in the Philippines, was also facing a suspension.
Jasareno said the audit on OceanaGold’s Didipio gold-copper mine showed “damage to houses allegedly caused by blasting and perceived dangers of underground mining”. OceanaGold CEO Mick Wilkes said in an email to Reuters that there had been no environmental violations.
Shares of the Australia-listed miner fell 8.2 percent, prompting the firm to request a trading halt.
OceanaGold later said it had not received a suspension order and that mining was continuing and it would work with the environment agency to avoid any disruption.
(Reporting by Enrico dela Cruz and Manolo Serapio Jr.; Editing by Himani Sarkar and Ed Davies)