DMCI Mining Unit Struggles As It Remains Closed - Marvin Germo

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DMCI Mining Unit Struggles As It Remains Closed

By: Marvin Germo | March 22, 2019

A Rough Year

The mining unit of DMCI Holdings Corporation is foreseeing a rough 2019. The unit’s inventory is running out and will soon need restocking. The fact its Zambales plant is still closed waiting for a signal to resume its business, it is the major reason why the mining unit is experiencing such challenges. On Thursday, March 21, 2019, DMCI Holdings Corp.’s shares increase by 1.82% or 22 centavos closing at P12.34 per stock.

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Shipping of Low Grade Nickel

As the company struggles with low inventory, it is expected that the mining unit will be shipping lower grade nickel with an average of 1.57% this year. This is comparatively lower than last year’s 1.7% from its shipments. As according to the unit’s president, the shipping of lower grade nickel would attract lower prices in the market as its stocks is closed to being depleted. Last 2018, the company was able to ship 643,000 wet metric tons (WMT) of nickel ore which can be seen 22% higher than the 2017’s shipment of 525,000 WMT. On the same year, the average price of nickel was $36, higher than 2017’s price of $29.

Sourcing from Berong Nickel Corp.

This year, the company expects to ship 800,000 WMT although the demand in the market is flat. This will be sourced majorly from its nickel assets in Berong Nickel Corporation (BNC). It can be remembered that the only who passed the DENR’s mine review last November 2018 was BNC. The DMCI’s mining unit, however, has received a motion for reconsideration wherein the government did not fully close the mining company but rather suspended its operation until further notice. The competition for nickel is also steeping as Indonesia opens up exports to enter the market. The market for nickel is expected to remain as it is in 2018.

DMCI’s Revenue And Income

As the mining unit of DMCI waits for the go signal to resume its operation, the company is doing its responsibilities to continue the site’s rehabilitation and reforestation to meet the conditions of the government. In relation to the challenges experienced, the mining unit still managed to generate a net income higher than 2017. The 2018 reported a net income jump to 93% or P190 million in figures. DMCI Holdings, however, reported a 2% decrease in its consolidated net income to P14.5 billion and a jump in its revenue to P83 billion. The loss of its coal mining unit is offset by the high performance of its property and construction units.

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