Philippines to shut half of mines, mostly nickel, in environmental clampdown

By Enrico Dela Cruz and Manolo Serapio Jr

MANILA (Reuters) - The Philippines ordered the closure on Thursday of 21 mines, mainly nickel producers that account for about half of output in the world's top nickel ore supplier, in a government campaign to fight environmental degradation by the industry.

Manila also suspended operations at another six mines, including the country's top gold mine operated by Australia's Oceanagold Corp, as Environment and Natural Resources Secretary Regina Lopez vowed to put the public's welfare above mining revenues.

"My issue here is not about mining, my issue here is social justice," Lopez, a staunch environmentalist, said at a briefing that showed footage of damage from mining to an audience including priests and residents of mining communities.

"Why is mining more important than people's lives?"

News of the mine closures sent global nickel prices higher and followed the earlier suspension of some operations amid an audit of the country's 41 mines that began shortly after outspoken President Rodrigo Duterte took office last June.

Some affected miners said they have yet to receive a formal order from Lopez's agency, while an industry group said companies would likely challenge the decision in courts if necessary.

Lopez said the nickel mines ordered to shut account for about 50 percent of the country's annual output, which analysts estimate at about 10 percent of world supply.

The risk of nickel supply disruption from the Philippines should boost global prices of the metal, analysts say, with the initial mine suspensions last year and the threat of more having fueled a rally.

"The Philippine disruption should have a bigger impact on the overall nickel market considering it is the biggest nickel ore producer in the world," said ANZ commodity strategist Daniel Hynes.

"If they are hard and fast orders, then the nickel price should be well supported."

NICKEL PRICE CLIMBS

Three-month nickel on the London Metal Exchange rose to a 2-1/2-week high of $10,375 a tonne in limited Asian trading with China still shut for the Lunar New Year break.

The decision comes after a months-long audit of the mining sector that began in July and a further review by the Mines and Geosciences Bureau in recent weeks.

"I visited the mines and I made my own judgment based on my own observations," said Lopez, adding that 15 of the mines ordered closed are located in watersheds.

Ronald Recidoro from the Chamber of Mines of the Philippines said companies named on the list would "definitely" take legal action, initially filing a motion for reconsideration with Lopez's agency.

"The audit process was clearly flawed," Recidoro told Reuters, noting the Chamber had opposed the inclusion of anti-mining groups in the audit teams.

Duterte has backed Lopez's mining audit, warning last year that the Philippines could survive without a mining industry. He supported Lopez's latest action on Thursday.

Mines ordered for closure include those run by Hinatuan Mining Corp, a unit of top Philippine nickel ore producer Nickel Asia Corp, and BenguetCorp Nickel Mines Inc.

Several companies, including Australia's Oceanagold, said they had not received any official orders.

"There is no legal basis for any proposed suspension," Oceanagold said in a statement.

(Reporting by Enrico dela Cruz and Manolo Serapio Jr.; Additional reporting by Melanie Burton in Melbourne; Editing by Richard Pullin)