First Metro Asset Management Inc

The Bellwether – Issue 22

Releasing the 22nd issue of The Bellwether, as published by FMIC’s IAG-Research.

This is a fortnightly publication on market action and outlook.

The following are the highlights of the issue:

Government lifts ban on mining permits; positive but no big deal for some

Competition hits AP’s hold on ancillary market; comeback of geothermal unit in 2H2013 is key to earnings

Scandium plant may be NIKL’s second upside

Government lifts ban on mining permits; positive but no big deal for some

A survey of the mining sector’s views on the government’s lifting of the ban on exploration and mining agreements.

Competition hits AP’s hold on ancillary market; comeback of geothermal unit in 2H2013 is key to earnings

More players in ancillary

What AP has put up in the reserve/ancillary power market as a first mover advantage is no longer just its own. The onslaught of competition hit AP hard. Ancillary energy sales dropped 19% last year. Ancillary revenues slid 7% or Php820mn to Php11.5bn. It should have been a more lucrative year for AP’s ancillary. Ancillary revenues were a third of the power generation EBITDA worth Php32bn. But the 2012 ancillary market results were inopportune. A record high 7,800MW peak demand in Luzon grid was a silver lining, demand-wise. Instead, competitors snatched a bigger share of the action; names like 728MW Caliraya Botocan Kalayaan operated by Sumitomo Corp. and Lopez-owned Energy Development Corp. through 305MW Green Core and 132MW FGHydro. Other difficulties were: 1) Magat’s water level being below the rule curve which held back contracting in 4Q2012; and 2) slower regulatory action on ancillary contract applications.

Scandium plant may be NIKL’s second upside

NIKL’s key earnings upside was its $150mn Taganito nickel ore processing High Pressure Acid Leaching Plant, its 2nd HPAL. The HPAL will be operationally in full swing by 2014 and underpins a consensus earnings growth of 44% to Php4bn next year. Still, NIKL’s second upside could be in the making. Sumitomo Mining Ltd. –NIKL’s partner in the HPAL — is doing a trial run next year of a milestone technology, the first in the country, that will recover and commercialize Scandium production, a rare earth metal derived from HPAL’s end-product nickel sulfide cobalt (NSC), sold at $2,000/kg in the open market (no LME benchmark) and used as a heat resistant, metal strengthener additive to aluminum and batteries. Scandium, also produced in Russia, Ukraine and China, go into automotive and electronics manufacturing.

Download the full PDF here! DOWNLOAD

Oriental Petroleum (OPM) may Double Earnings on Galoc 2’s Commercialization in 2014

Doubling of Daily Output in 2014.

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

You must be logged in to post a comment.

First Metro Asset Management Inc