Mining Companies in Focus: Nickel Producer Vale Indonesia
Although Indonesian nickel miner Vale Indonesia saw its sales rise by 32.4 percent year-on-year (y/y) to USD $143.95 million in the first quarter of 2017 supported by the 24.1 percent (y/y) growth in the (average) nickel matte price in Q1-2017, the company is pessimistic about the direction of the nickel price in the remainder of 2017 as inventory levels remain high on the London Metal Exchange and Shanghai Futures Exchange.
Ratih Amri, Corporate Secretary at Vale Indonesia, said Vale Indonesia's production and sales volume indeed rose in the first quarter of the year. However, the 24.1 percent (y/y) increase in average nickel matte price to USD $8,214 per metric ton has been most decisive in terms of the miner's corporate performance.
However, compared to the last quarter of 2016 the nickel price has declined. This trend is expected to persist in the next couple of quarters as statements of ministers in the world's key nickel exporting countries - the Philippines and Indonesia - point at rising nickel supplies.
Recently, Philippine President Rodrigo Duterte replaced environmentalist and philanthropist Regina Lopez as Head of the Department of Environment and Natural Resources with former army general Roy Cimatu. While Lopez was eager to shut down many mines across the Philippines, citing environmental breaches, Cimatu is expected to encourage output in the nation's mining sector, thereby boosting production of nickel in the world's largest exporter of the ore.
Meanwhile, in Indonesia, authorities eased the ban on exports of mineral ore at the start of the year, hence giving opportunities to local miners to boost production and shipments of nickel. With expectation of rising nickel output in the Philippines and Indonesia the nickel price will be plagued by downward pressure.
Vale Indonesia is eager to maintain stable production rates in 2017 with a 80,000 metric ton target for its nickel output, up from 77,581 metric ton in the preceding year. The miner, a subsidiary of the world's second biggest mining company headquartered in Brazil, also plans to build two smelters (in Central Sulawesi and Southeast Sulawesi).
So far this year, shares of Vale Indonesia (listed on the Indonesia Stock Exchange) have fallen 32.62 percent to IDR 1,885 a piece.