DMCI Holdings still upbeat on 2017 despite mining uncertainty
MANILA, Philippines – Consunji-led engineering conglomerate DMCI Holdings Incorporated said this year holds good prospects despite its nickel mining unit being hampered by suspensions from the Department of Environment and Natural Resources (DENR) since last year.
DMCI Mining endured a tough 2016 as its two subsidiaries Berong Nickel Corporation (BNC) in Palawan and Zambales Diversified Metals Corporation (ZDMC) were both ordered to suspend operations. Its regulatory troubles have extended into 2017.
"We were projecting shipping out 800,000 tons of nickel ore this year but that was considering output for Q2," said DMCI Mining president Cesar Simbulan following DMCI Holdings' stockholders' meeting on Tuesday, May 16. "It looks unclear at this point as the 2nd quarter is ending and we haven't been able to operate yet."
Simbulan added that the early onset of the rainy season will hurt operations further. A more realistic target for 2017, he said, would be 500,000 tons of nickel ore.
DMCI Mining has so far done 3 shipments totaling 158,000 tons of stockpiled ore valued at P299 million this year, after it was granted temporary reprieve by the DENR. But it was again hit with a fresh suspension in April.
"The firm has filed an appeal against the new suspension with the Office of the President, and according to rules and regulations, upon filing of the appeal it should stay the execution of the order of the DENR to suspend," Simbulan said.
In anticipation of that, DMCI Mining has gradually begun rehiring its workers. It had laid off around 80% of its workforce following the suspensions.
Simbulan also cautiously welcomed the appointment of new Environment Secretary Roy Cimatu. The former Armed Forces of the Philippines chief replaced feisty anti-mining advocate Gina Lopez, who had been rejected by the Commission on Appointments after her controversial orders angered mining companies.
"As a military man he (Cimatu) is regimented and will not rush into decisions. So he will take the time to learn the real situation with regards to mining," said Simbulan.
Cimatu earlier said he would allow responsible mining in the country. (READ: DENR employees hope Cimatu will continue Lopez's advocacies)
Positioned for infrastructure push
Despite the uncertainty, DMCI Holdings chairman Isidro Consunji still expects his mining division to make a modest profit. Overall, the conglomerate expects 2017 to be more profitable than 2016.
"We expect a better year than last year. I think Semirara Mining and Power Corporation (SMPC), DMCI Homes, and Maynilad and DMCI Power will all outperform their results last year and I think the mining [unit] won't run a loss," Consunji said.
He also noted that while DMCI Holdings' construction arm, DM Consunji Incorporated, may be well-positioned, its performance this year will hinge on whether the government pushes through with its ambitious infrastructure plan.
The conglomerate started 2017 with some momentum, having hit a net income of P3.7 billion in the 1st quarter, up 22% from the P3 billion recorded in the same period in 2016.
Much of this was due to mining operations, particularly coal arm SMPC which booked a record 52% increase in net profit for the 1st quarter to P4.42 billion, driven by a 24% increase in coal sales volume and 41% increase in coal prices.
SMPC contributed more than half of the parent firm's net income at P2.47 billion.
Nickel arm DMCI Mining also returned to profitability in the 1st quarter, contributing P32 million compared to a net loss of P100 million a year ago.
In contrast, Maynilad, DMCI Homes, and DM Consunji Incorporated all registered drops in net income of 30%, 11%, and 8% respectively compared to last year. – Rappler.com