Value of mineral output falls, tracking nickel price decline

MANILA, Philippines - The peso value of minerals produced for the first nine months this year plummeted as nickel prices fell, a report from the Philippines’ Mining and Geosciences Bureau indicated. Mineral costs during the period fell to P50.95 billion from P64.91 billion during the same period a year ago, tracking the decline of nickel, a commodity used for magnets and coins. In May last year, nickel soared to $23.67 per pound, eventually falling to $8.07 per pound in September this year. Moreover, production of nickel ore and concentrates fell 23 percent to P11.94 billion for the third quarter than last year’s P27.59 billion. Meanwhile, costs of gold, silver, and copper remained high, offsetting lower output of local miners. For the January to September period, gold—seen as a hedge against inflation and used for jewelry—accounted for 66.32 percent of local production. Gold produced during the period reached 28,062 kilograms (kg), lower than 29,798 kg last year. Despite the output cut, the precious metal’s prices in the world market remained robust with values rising by 34.8 percent. Gold cost $897.86 per troy ounce for the third quarter this year, higher than $665.74 recorded during the same period last year. Similarly, output of silver—used for jewelry, dental filings, and coins—plunged by 53 percent as TVI Resources Development Philippines Inc. decommissioned its mine. As a result, only 11,113 kgs of the mineral was produced from July to September this year from 23,662 kgs during the same period last year. For the three month period, the precious metal’s production value also slipped by more than half to P221.46 million from P460.46 million last year even though silver prices rose to $16.61, as of the third quarter. However, in September this year, silver declined to $12.35 owing to expectations of lower demand. Copper output reversed the trend, as production expanded by four percent from July to September this year. Production of copper—used for wires and pipes—rose to 68,359 dry metric tons during the period, higher than 65,528 dry metric tons last year. Despite the production hike, the value of the industrial metal fell 13 percent to P4.92 billion as of the quarter ending September from P5.66 last year. Metal prices are expected to fall for the last three months as the global credit crunch is seen to cut appetite for minerals. “We see China and India, which played significant roles in the uprising of metal prices in 2006, curbing their consumption and demand for nickel, copper, gold and silver. This situation has created havoc in the metals market fundamentals resulting to the supply and demand imbalance. Basic economics show that more supply and lesser demand equals softer price," the report said. - GMANews.TV