DENR Secretary Gina Lopez
New Environment and Natural Resources Secretary Gina Lopez delivers a speech during turnover rites at the Department of Environment and Natural Resources (DENR) headquarters in Quezon city, Metro Manila, Philippines July 1, 2016. Reuters/Ezra Acayan

Global nickel supply is expected to be tighter in the coming months following the suspension of the licence of 20 miners in the Philippines for failing a major environmental audit. Leading the 20 miners is OceanaGold (ASX: OGC), an Australian miner.

With the suspension, OceanaGold – which has been operating the Didipio copper and gold mine in Nueva Vizcaya province for three years – halted trading of its shares on Tuesday after reports of the suspension caused a sharp drop in its shareprice. However, OceanaGold says Didipio continues to operate since it has not received any formal suspension order from the Department of Environment and Natural Resources (DENR) under new secretary, Gina Lopez, reports Australian Financial Review.

The company’s stock declined 8.2 percent to $4.35 when it halted trading. Local residents are opposed to the Australian miner’s planned exploration programme, reports Sydney Morning Herald.

Even before Tuesday’s crackdown by the DENR, nickel supply has already been tight. The department earlier suspended 10 other miners after failing the environmental audit under the newly appointed secretary of the Duterte administration.

Mick Wilkes, managing director of OceanaGold, says he is disappointed by the DENR move. He points out that Didipio won several awards and government recognition for its safety and environmental standards and community work.

With the new suspension of licences, only 10 miners passed the audit and allowed to continue operating. Lopez, who would meet with the miners which failed the audit on Thursday before making a final decision on their status, says, "The critical thing is that the resources of the country will be utilised in a way that benefits the greater majority.”

Meanwhile, the Australian reports that iron ore price went down 0.4 percent on Wednesday to US$56.20 (A$73.24) from US$56.40 (A$73.49) on Tuesday, according to The Steel Index. It is the second consecutive day of drop in price for the key steel-making ingredient.

Although most analyst foresee the price of the commodity continuing to go down from current levels, Morgan Stanley analysts, in a research note, upgraded its forecast by 11 percent for 2016 and 27 percent for 2017. The analysts says it expects iron ore prices to reach a low in Q4 2016, but see fiscal 2016 as a trough year for free cashflow.

VIDEO: OceanaGold Didipio Overview Video Tour

Source: OceanaGold Corp