Nickel Asia Sinks ₱1.9B After Mindoro Energy Bet Fails
- May 9, 2025
Nickel Asia Corporation (NAC) took a major financial hit after writing off ₱1.19 billion tied to its ill-fated bet on its subsidiary, Mindoro Geothermal Power Corporation (MGPC), following the project’s failure to deliver on its promise, according to Bilyonaryo.com.
A recent technical audit, backed by an independent specialist, sealed the project’s fate after revealing that MGPC’s wells produced just 18 tons of steam per hour—well short of the output needed to support its intended power generation setup. The dismal figures ultimately led to the project being deemed unviable.
The hefty impairment charge was a major drag on NAC’s bottom line, contributing to the sharp decline in its 2024 net earnings.
Financial standing
NAC’s profit plunged to ₱1.52 billion in 2024, down 58% from the previous year, as weaker nickel prices and sluggish revenues took their toll. The decline also reflected a ₱1.55-billion hit from its shelved geothermal venture in Naujan, Oriental Mindoro—now chalked up as a costly misstep.
The failed geothermal push was channeled through MGCP primarily to fund exploratory drilling. Adding to the company’s woes, ore sales revenue slipped 8.5% to ₱19.56 billion, as disclosed in February.
The company saw its 2023 earnings sliced nearly in half, dropping to ₱3.7 billion from ₱7.9 billion, as a flood of supply from Indonesia drove nickel prices sharply lower. In a March disclosure, the company reported a 20% dip in its average selling price, down to $23.30 per wet metric ton from $29.17 the year prior.
The price slump also dealt a blow to NAC’s investments in its downstream ventures, triggering a ₱1-billion loss in its equity stakes in the Coral Bay and Taganito high-pressure acid leach (HPAL) facilities in Surigao del Norte and Palawan.
According to NAC Vice President for Treasury, Investor Relations, and Sales Andre Mikael Lu Dy, sluggish demand from China was another key factor dragging down the company’s earnings. Ore sales revenue also took a hit, falling 16% from ₱25.5 billion to ₱21.4 billion.
Challenges of Mindoro’s geothermal project
Bilyonaryo.com reported that NAC’s Mindoro geothermal project has struggled since its inception. In 2016, MGPC’s initial drilling uncovered temperatures of just 140°C to 165°C—far below the threshold needed for efficient power generation. The company considered various solutions, such as extending drilling into new areas and pursuing joint ventures.
In 2017, a report from geothermal consultancy GeothermEx in the U.S. revealed that the southern wells had minimal capacity, producing just 3.5 megawatts, significantly below the original 10MW goal. Despite this, MGPC continued its evaluations and, in 2021, partnered with Symba Renewable Energy EHF to assess the economic feasibility of the wells.
MGPC’s geothermal service contract was terminated by the Department of Energy (DOE) in May 2024 due to vague project proposals and overly optimistic projections. The contract was restored in July after the company submitted a revised five-year work plan and adjusted its project goals to more realistic levels.
NAC formed MGPC in 2014 with an initial aim to generate up to 40 megawatts of power throughout a 25-year span.
Sources:
https://business.inquirer.net/450034/triple-whammy-halves-nickel-asia-bottom-line
https://business.inquirer.net/508932/nickel-asia-profit-drops-58-amid-falling-prices
