Nickel prices were trading higher on Wednesday, supported by the Philippine’s planned closure of 23 mines. This was the second-straight session of gains for the metal, with Tuesday’s advance coming despite an overall negative trend in the base metals complex.
Last Thursday, the Philippines released the results of its latest mining inspections and ordered the closure of 23 mines, mainly nickel producers. These nickel miners account for about half of output in the world’s top nickel ore supplier. The mines facing closure are said to have violated environmental regulations.
Philippine Environment and Natural Resources Secretary Regina Lopez had this to say about the decision: “My issue here is not about mining, my issue here is social justice.” Previously, Lopez promised to put the “health and safety of the public” above mining revenues. She has the full support of Philippine President Rodrigo Duterte who has said that the Philippines could survive without a mining industry. When these inspections were announced last year there were doubts that the government would actually go through with suspensions, not wanting to forgo the revenue from mining. So far this has proven not to be the case.
When the mine closures were announced last week London Metal Exchange traded nickel futures climbed to a three-week high of $10,500 a ton. Although nickel was higher on Wednesday, it was trading just below this price point, at $10,480 per ton. It was holding steady above its resistance level of $10,425, but this was failing to spark any significant technical buying. Support was all the way down at $9,350. Even though nickel futures flirted with three-week highs, analysts believe the reaction is subdued given the gravity of the mining closures. Further upside is expected. The Philippines is the world’s largest nickel producer.
Nickel miners will likely do what they can to fight the closures. Speaking to Reuters, Ronald Recidoro from the Chamber of Mines of the Philippines said the companies impacted would “definitely” take legal action.