The Philippines’ decision to suspend half of its mining operations for failing to meet environmental standards boosted nickel prices on Tuesday, signalling a further recovery in its fortunes after it hit a 13-year low earlier this year.

The metal, used to make stainless steel, jumped 2 per cent on the London Metal Exchange to $10,705 a tonne after the Philippines ordered the suspension of 20 mines in the country for failing to meet environmental regulations. Shares in nickel producers also rose.

Nickel is key for companies such as London-listed Glencore, which produces the metal from mines in Australia and New Caledonia.

Nickel has been one of the best performing commodities this year since its February nadir, rising 19 per cent, propelled by investors anticipating a supply crunch following the election to office of president Rodrigo Duterte in May.

Mr Duterte’s environment secretary Gina Lopez quickly launched an audit on mining in the country.

Results of that audit, released on Tuesday, found only 11 mining operations out of 41 complied with the country’s environmental and mining laws. Ten mines have already been ordered to stop production in the country.

“The resources of the country must be utilised in such a way that these will benefit the greater majority,” Ms Lopez told reporters, according to the Department of Environment and Natural Resource’s Facebook page.

The mines that failed the audit, including those previously ordered shut, accounted for half of the Philippines’ nickel production last year, officials said.

Analysts at Goldman Sachs said the total production lost is 223,000 tonnes, or 11 per cent of global supply.

Analysts at Commerzbank said: “The shutdowns are likely to further tighten the global nickel market, which is already in a supply deficit in any case. In our view this justifies higher nickel prices.”

The 20 mining companies have seven days to respond to the audit.

“It’s not definite those 20 will get to close,” said David Wilson, an analyst at Citi.

Shares in Australian nickel producers Western Areas and Independence Group rose 10.9 per cent and 3.9 per cent, respectively, on Tuesday. Nickel Asia Corp, a Philippine-listed producer, also rose 2.7 per cent in Manila.

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