Nickel Asia is currently in discussions to divest its minority stake in a key processing plant to Japan’s Sumitomo Metal Mining.

This strategic move aligns with the Philippines’ top nickel producer's focus on upstream mining and renewable energy ventures.

The company aims to sell its entire 15.63% stake in Coral Bay Nickel and will enlist a third party to conduct a valuation of the Coral Bay shares, as disclosed in a stock exchange filing on Tuesday, according to a report by Bloomberg.

Coral Bay is one of Nickel Asia’s two high-pressure acid leaching plants and the Philippines’ only processing facility for nickel, which is essential for producing stainless steel and batteries for electric vehicles (EVs).

Nickel Asia will retain its 10% stake in the Taganito HPAL plant, as confirmed by Andre Dy, vice-president for treasury and investor relations at the company, the report stated.

The Philippines reportedly stands as the world’s second-largest supplier of nickel ore to China, the top market for the metal.

Nickel Asia’s decision to sell comes amid the South East Asian nation’s push for miners to invest in processing facilities rather than merely exporting raw ore, aiming to enhance its role in the EV supply chain.

According to the report, over the past three years, Coral Bay’s financial performance has suffered due to increased operating costs and declining nickel prices on the London Metal Exchange.

Dy noted that the divestment is expected to “positively impact” Nickel Asia’s growth and diversification objectives.

From January to September 2024, Nickel Asia reported 503 million pesos ($8.7m) in equity losses from Coral Bay, following a loss of 442 million pesos in the same time frame in 2023.

With the planned sale of its Coral Bay shares, the miner stated it would cease to recognise equity gains or losses from this investment.

The ongoing global nickel glut is likely to exert continued pressure on prices, which could affect Nickel Asia’s primary revenue sources, including equity income from its HPAL plants, according to Neil Maderaje, a research associate at China Bank Securities.

Nickel Asia has also outlined plans to expand its nickel operations within the Philippines, including the development of two additional mines. It is also exploring the potential for a third nickel processing plant in the region.

The company wholly owns four operational mines in the Philippines and holds partial stakes in a further eight exploratory sites. It also owns partial stakes in the country’s two nickel processing plants.