Nickel Asia ventures into renewable energy
Nickel Asia Corp is all set to diversify into the power business through the acquisition of a controlling stake in a local renewable energy firm.
In a statement, Nickel Asia said that it has opted to provide a $12.6 million loan directly to Emerging Power Inc (EPI) instead of the latter’s project company developing the Montelago geothermal power project in Occidental Mindoro.
Under the terms of the loan agreement, Nickel Asia has the option to convert $10.2 million of the loan into 55 percent equity in EPI.
The Montelago geothermal plant project involves the development of a 40-megawatt (MW) plant at a projected cost of $185 million. Drilling of two geothermal wells for the project is expected to commence towards the latter part of this year.
Besides Montelago, EPI is also advancing other renewable energy projects within the country, chief of which is a 70-MW wind project in the province of Camarines Sur. EPI is currely nin discussions for a joint venture with Cornerstone Energy Development Inc, a US-based company that has installed over 630-MW of wind power in the US, for the said wind farm.
Other renewable energy projects being advanced by EPI is a 10-MW solar project in Camarines Sur, a 2.5-MW biogas project in Quezon and a 10-MW solar and bunker hybrid project in northern Palawan.
“While we disclosed in our May 6, 2014 release that our initial investment would be in the form of a collateralized loan convertible to equity in the Montelago project company, we have now decided to make our investment directly in EPI, the project proponent, to take advantage of other renewable power projects in their portfolio,” Gerard H. Brimo, Nickel Asia president and chief executive officer, said. “In so doing, our objective is to develop a new business segment that can generate long-term revenues while at the same time addressing the dire lack of power in our country using renewable energy sources.”
Nickel Asia’s first power investment involves the construction of a 10-MW bunker fired power plant in Surigao city, which is designed to minimize power outages being experienced almost on a daily basis. The project has been approved by regulators and is expected to be operational next year at a total cost of P1 billion.
For the first half of 2014, Nickel Asia’s net income spiked by more than five-folds to P4.6 billion from P893 million in the same period last year. This after revenues more than doubled to P9.3 billion from P4.4 billion year-on-year.
The increase in profits was attributed to a combination of higher shipment volume and nickel prices.
Total volume of nickel ore sold and delivered from the company’s four operating mines in the first half reached 7.73 million wet metric ton (WMT) as against 5.54 million WMT in the same period last year.
The surge in shipment volumes was mainly the result of increased ore deliveries to the company’s Taganito processing plant in Surigao del Norte, now on its first full year of operations. The said plant was still in its preoperating stage during the same period last year.