Employees work in a ferronickel smelter owned by state miner Aneka Tambang Tbk at Pomala district in Indonesia's southeast Sulawesi province March 30, 2011. Image Credit: Reuters

Nickel surged to a six-week high after the Philippines, the world's top ore supplier, said three quarters of its mining industry fell short of government standards in an audit, raising the prospect of more closures and tighter supply.

The nickel mines already shut along with those recommended for suspension accounted for 56 percent of production by value last year, Environment Undersecretary Leo Jasareno told reporters at a briefing in Manila on Tuesday.

Of 41 metallic mines in the country, mostly nickel, 20 have been recommended for suspension unless they can respond to shortcomings within days, while about 10 have already been halted.

"Results of the audit are a tiny bit aggressive in terms of number of suspensions than originally expected,"  Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview.

Nickel for delivery in three months rose 0.9 percent to settle at $10,630 a metric ton at 5:51 p.m. on the London Metal Exchange. Prices rallied as much as 3.5 percent earlier to $10,900 a ton, the highest since Aug. 10.

Nickel has climbed about 25 percent since the start of June as the Philippines began a mine audit to see which operations fall short of environmental or welfare standards.

Jasareno and Environment Secretary Gina Lopez presented the initial findings of the checkups on Tuesday. Mines recommended for suspension have seven days to respond before a final decision.

Eleven mines passed the audit. The nation accounts for almost a quarter of global mined nickel supply, with most cargoes feeding China's stainless steel industry.