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With Philippine Mining Boom In Full Swing, Local Nickel Producers Flourish

|Includes: Amur Minerals Corp. (AMMCF)

While the Indonesian embargo is a global quandary that sent the entire nickel commerce into bedlam, the Philippines, however, considers it a windfall.

Ever since Indonesia decided to prohibit the exportation of its unprocessed minerals, including its laterite nickel ore, the Philippines had no choice but to take over. The country has become the default ringleader of the global supply segment, with giant consumers like Japan and China now tapping its production for their respective steel industries.

Exports from the Philippines after the ban rose to 24 percent to 31.2 million tons in November, signaling the start of a mining boom.

Now, local companies are doubling their efforts in meeting the increasing demand; shipments of nickel from the Philippines have intensified in number since January 2014.

"Indonesia's ban affected us positively. We will maximize this window and ship as much as we can," said Mike Defensor, chairman of Pax Libera Mining Inc. in an interview with Bloomberg. He also added that his company would open four more sites in the country in 2015.

Nickel Asia, the country's largest nickel producer, stated that it is looking forward to breaking its sales record in 2014. The company had to double its production in 2014 as China and Japan tapped their services on news on Indonesia's ore embargo, exporting 17.8 million wet metric tonnes (NYSE:WMT) to Japan and China, which is 28 percent up from 2013.

Nickel Asia was the frontrunner of the Philippine stock market last year. The company's shares gained more than 200 percent on ore sales boom, buoyed by the series of quandaries that affected the nickel industry. Its shares rose 3.2 percent, and have since gaining attention from nickel investors in the world.

The country's third largest producer, however, is seeing a $600 million rise in a Manila IPO next month as part of its expansion program amidst the continuously increasing prices triggered by the ore ban.

Global Ferronickel Holdings Inc. said that it is currently in talks with its main investors and top consumers to finalize the said expansion plan. The company is targeting to earn as much as P26.98 billion in the first local commodity IPO since Coal Asia Holdings Inc in 2012.

The current boom is greeted by the Philippine government's stricter adherence to enhancing transparency in the local mining sector.

Through the Philippine Extractive Industries Transparency Initiative (PH-EITI), the government will promote transparency and accountability towards mining companies. This will be followed by publishing a comprehensive report focusing on government earnings from mining firms, how much the industry actually pays the government, and how the citizens benefit from the earnings of the extractive industries. This, according to Finance Assistant Secretary Maria Teresa Habitan, will elevate the mining sector's reputation amongst tax payers and foreign investors.

However, the entire supply segment remains precarious, as investors and consumers know that the Philippine supply is not enough to plug the gap Indonesia left. Smaller companies like Amur Minerals Corporation (OTC:AMMCF) and Asian Minerals Resources (V.ASN) are seen as future alternative suppliers, as they are both focusing on giant, promising nickel reserves, the Kun-Manie Reserve (Russia) and Ban Phuc mine (Vietnam), respectively.