News and Announcements

News & Announcements

DMCI to operate Benguet nickel mine

By Neil Jerome C. Morales on October 9, 2009

DMCI MINING CORP., a subsidiary of listed Semirara Mining Corp., has signed a deal with Benguet Corp. for mining operations in a nickel mine in Zambales.

This came after the Consunji-led DMCI Mining suspended nickel and ore mining activities in the province last July largely due to the prevailing low nickel prices in the world market.

DMCI Mining will explore and develop selected areas of Benguet’s 1,406-hectare Sta. Cruz nickel mine, the firm told the Philippine Stock Exchange yesterday.

Under the deal, DMCI Mining will have the rights for the "production and sale of high-grade nickel ore above 2% [grade] of up to 200,000 metric tons of nickel ore per year for three years, extendible upon mutual agreement."

Early this year, Benguet, the country’s oldest miner, shipped two batches of nickel ores for mettalurgical testing to Europe and China.

Given the recovery of metal prices, Benguet said "the offtake agreement assures the company of a ready market for its high-grade nickel product."

Nickel prices for cash buyers yesterday closed at $8.22 per pound (lb.) from the average price of $5.64 and $4.75 per lb. in the second and first quarter, respectively, data from the London Metal Exchange showed.

"Benguet is conducting a feasibility study on tank leaching of middle grade ore and on pelletizing nickel ore in order to add value by processing ore," DMCI Mining said.

Early this month, DMCI Mining sold its 78,318-square- meter port facility in Zambales to Montemina Resources Corp., leaving analysts to speculate that the construction-based conglomerate DMCI Holdings, Inc. might soon exit nickel mining and focus instead on Semirara’s coal mining operations in Antique.

On Tuesday, Benguet created Benguetcorp Nickel Mines, Inc. as part of a plan to spin off its businesses. Creditors are running after the miner, which has yet to repay debts totaling P1.2 billion.

Prices of Benguet Class "A" shares went up yesterday to P10.75 apiece from P10.25 on Tuesday while shares of Semirara dropped to P37.50 from P38 apiece on Wednesday. — Neil Jerome C. Morales