Metals boom, nickel ops spur Benguet

The World Bank noted a steady recovery in the commodity markets, lifted by improved growth prospects, fueled by the reopening of the global economy

Booming commodities market pushes Benguet Corp. profits nine-folds.

The booming commodities market saw Benguet Corp.’s first-quarter income going into overdrive as it totaled P518.56 million, more than nine times higher than that of the same period last year.

The company attributed the profit surge to the continued recovery of the sector and stable forecast throughout the year. Benguet Corp. registered P56.7 million net income for the same period in 2020.

The PSE-listed firm said in its disclosure the better-than-expected after-tax income “rode high on the momentum of their exceptional operating performance in 2020 following the DENR (Department of Environment and Natural Resources) lifting of the suspension of its nickel operation in Zambales.”

Rising metal prices are helping mining companies recover from the slump as the global economy struggles with supply constraints amid the restart of economic activities.

Benguet Corp. said in a report to the stock market that “the 915 percent increase in after-tax income was the result of combined earnings from its gold, nickel and lime projects, which accounted for total consolidated revenues of P1.3 billion in the first quarter or over three times that of last year’s P408 million revenues.”

Nickel sale resumes

Income from Benguet Nickel Mines Inc. (BNMI) totaled P1.05 billion for the period because of higher shipments and rising nickel prices.

“The positive variance was mainly attributable to the eight boat loads of nickel ore exported during the first three months of 2021 with an aggregate volume of 435,475 tons valued at P1.05 billion compared to three boat loads weighing 158,650 tons valued at P205.2 million a year ago,” the company noted.

“The favorable market is reflected in the increased average selling price of BNMI’s nickel exports for the quarter this year to $49.31 per ton, almost double the average price of $24.87 per ton for the same period in 2020.”

Benguet added that while the cost and operating expenses unavoidably went up by 68 percent from a year ago to P571.1 million due to higher production, selling expenses, and payment of excise taxes and royalty fees to government.

Prudent cost management, substantial nickel export, as well as improved gold production volumes, offset the losses.

“Amid the pandemic, the company is steadily pursuing a growth strategy as it continues to implement precautionary measures to protect the health and safety of its employees, contractors, and the host communities,” Benguet said.

Prices up on reopening

In its semi-annual Commodity Markets Outlook, the World Bank (WB) noted a steady recovery in commodity markets due to improved growth prospects, fueled by the reopening of the global economy.

But the WB outlook said the recovery is heavily dependent on the government’s ability to contain the coronavirus disease 2019 outbreak and will be achieved through policy support measures and production decisions among major producers.

Fitch Solutions also upgraded its long-term outlook on nickel prices from $15,750 per ton to $16,500 per ton for 2021.

Fitch noted the end of the rainy season in the Philippines could further spur domestic mining activities.

At the same time, Indonesia’s nickel metal production is seen to experience a 33 percent yearly growth this year.