Sumitomo Metal to Start Philippine Nickel Project

TOKYO, Sept. 15 -- Sumitomo Metal Mining Co., Japan's largest nickel producer, will start construction of a $1.3 billion project in the Philippines as global demand increases.

    The Taganito nickel and cobalt sulfide plant in north-east Mindanao Island will start operation in August 2013 and continue for 30 years, the Tokyo-based company said today in a statement on its Web site. Construction will begin next March, it said.

    Nickel prices have jumped 41 percent this year, touching a one-year high in August, amid growing optimism for a global economic recovery following $2 trillion of economic stimulus spending by governments worldwide. The industrial metal is used mostly to make stainless steel.

    "The timing for the start of this project is good as global demand for stainless steel and electronics parts is forecast to grow amid cheaper costs to secure equipment and to build facilities," Takashi Murata, an analyst at Daiwa Institute of Research in Tokyo, said by phone today.

    Three-month delivery nickel on the London Metal Exchange fell 2.1 percent to $16,600 a ton at 3:36 p.m. Singapore time. The contract jumped to $21,325 on Aug. 13, the highest since Aug. 22, 2008.

    The project will use a high-pressure acid leaching process to recover an intermediate nickel and cobalt material from low- grade ore supplied by Taganito Mining Corp, a unit of Nickel Asia Corp., Sumitomo Metal Mining said.

    Volumes will be further processed at the company's Niihama refinery in Ehime prefecture in western Japan. Output from the project is forecast at 30,000 tons of nickel and 2,600 tons of cobalt a year, it said.

    Sumitomo Metal Mining's total nickel production capacity will rise to around 100,000 tons of nickel a year, the company said. Current capacity is 63,000 tons, including ferro-nickel.

    "With this project, Sumitomo Metal Mining is closer to being a major nickel producer not only at home but abroad," Daiwa's Murata, said.

    (Source: Bloomberg)