In what seems to be a reversal of fortunes, an all Filipino-owned nickel company acquired 20 percent of a Chinese nickel processing company, one of its major markets for the ore to improve the synergy between the two companies.
Rarely does a Filipino company supplying raw material to its foreign partner, who processes the ore into finished products, buy into a foreign company to create a reliable and consistent synergy.
But all-Filipino company, Global Ferronickel Holdings Inc. acquired 29 percent stake in Guangdong Century Tsingshan Nickel Industry Co. Ltd. (GCTN), according to a disclosure last Monday.
“The acquisition is expected to create reliable and consistent synergies between FNI (the company’s stock symbol) as a nickel ore supplier and GCTN as a value-added processor, and support our ongoing diversification projects to boost profitability,” Global Ferronickel President Dante R. Bravo said in a disclosure that was reported by Business World.
The acquisition was made through the purchase of shares in GHGC Holdings, Ltd. (GHL). GHL owns 90 percent of the GCTN stock portfolio.
In a separate disclosure, Global Ferronickel further said that it signed a share purchase agreement to acquire 22.22 percent shareholding in GHL for $75 million.
“This shareholding gives Global Ferronickel 20 percent indirect ownership in GCTN and provides experience and capabilities in value-added processing of nickel ore,” according to the company.
GCTN is a Chinese nickel alloy enterprise that operates smelters with rotary kiln-electric furnace technology. It produces about 28,000 tons of pure nickel annually.
The firm also has a 33-hectare facility employing over 600 employees. Its customers are mainly from Guangdong’s Economic and Technological Development Zones and abroad.
“This initiative will help manage risks, optimize value to stakeholders, and develop downstream integration of the value chain,” Global Ferronickel said.
“To complement its expansion targets, the company continues to pursue investments in high-growth firms and industries that can enhance operational and cost efficiencies,” it added.
In September, the firm announced that its affiliate Ipilan Nickel Corp. completed its maiden shipment of nickel ore for export to China.
It exported 54,700 wet metric tons (WMT) of medium-grade nickel ore to GCTN from its mine site in Brooke’s Point, Palawan.
Global Ferronickel also noted that Platinum Group Metals Corp. (PGMC) is its subsidiary and Ipilan Nickel Corp. is an affiliate.
“PGMC is a leading nickel ore producer, while Ipilan Nickel has just conducted its maiden shipment of nickel ore to China,” it added.
Global Ferronickel said it is diversifying its investments towards high-growth firms and industries that can provide operational synergies and improve cost efficiencies to complement the growth potential of the company’s nickel mining business.
“The business diversification initiatives will provide risk reduction and optimal value to stakeholders. This results in vertical integration of the value chain,” it added.
Global Ferronickel has interests in nickel ore mining, logistics, cement and steel production, and port operations.
In the second quarter, the firm’s net income dropped by 16.2 percent to P615.58 million from P734.56 million in 2021.
At the stock market on Monday, Global Ferronickel shares declined by 4.31 percent or 10 centavos to close at P2.22.
Tags: #GlobalFerronickel, ##GCTNofChina. #nickelore, #exports