Indonesian Miner Antam's Nickel Smelter Plans Hinge on Easing of Ore Export Ban: CEO
Jakarta. Indonesian state-controlled miner Aneka Tambang (Antam) may not have the cash flow for downstream investments worth at least $500 million if a ban on nickel ore exports is not eased, its chief executive told Reuters on Monday (28/11).
Indonesia banned metal ore exports in 2014 to encourage miners to build domestic smelters to shift exports from raw materials to higher-value finished metals and create jobs.
Antam hopes the government will allow some exports of nickel ores, although other companies say any resumption of shipments could undermine metal prices and hurt investments that have already been sunk into processing plants.
Antam has received Rp 3.5 trillion ($258.9 million) in government funding to develop a smelter in Indonesia's North Maluku province, but Antam CEO Tedy Badrujaman said the company wants to add two more lines and build a stainless steel factory.
"There is still a lot that we need to develop," Badrujaman said in an interview. "What can bring cash to Antam is exporting nickel ores. Overseas, the prices are quite good and Antam's cash flow can be revived."
Antam swung to a net profit of Rp 38.3 billion ($2.84 million) for the nine months ended Sept. 30, from a loss of Rp 1.04 trillion a year ago, mainly due to a rise in gold prices.
But nickel remains a key revenue contributor for Antam, and some analysts, including Moody's Investors Service, had downgraded Antam's rating after the 2014 ban due to concerns about the risk of weakened earnings and cash flow.
Several government officials said last month that Indonesia was considering allowing annual shipments of up to 15 million metric tons of nickel ore.
But a minister told Reuters on Monday the ban is likely to stay in place as it helps to generate value for Indonesia in terms of taxes and employment.
"I think we don't need to export any more," Luhut Pandjaitan, the coordinating minister for maritime affairs who also has oversight on Indonesia's mining policy, said, adding that the ban was not just intended for any single company.
Antam's Badrujaman, however, welcomed a government official's announcement last week that Indonesia planned to cut the royalty charged on sales of processed and refined nickel to 2 percent from 4 percent.
The move could lead to annual cost savings of up to Rp 60 billion for Antam, he said, assuming that the company sells 20,000 tonnes of processed nickel.
Antam, 65 percent-owned by the Indonesian government, mines commodities including nickel, gold and bauxite. Its main rivals are Vale Indonesia and a joint venture between Indonesia's Bintangdelapan Group and China's Tsingshan Group.
Reuters
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