Antam to support Boost Capex by 133 percent Downstream Expansion

Antam to support Boost Capex by 133 percent Downstream Expansion . State-owned diversified miner PT Aneka Tambang (Antam) is seeking to increase its capital expenditure (capex) by 133 percent annually to Rp3.23 trillion (US$235.15 million) this year in a bid to support the construction of its processing facilities.

Antam intends to use the largest part of the expenditure, 73.1 percent, on the first development phase of a new ferronickel plant in East Halmahera, North Maluku, according to its 2018 Work Plan and Budget.

The facility is expected to have an annual capacity of 13,500 tons of nickel in ferronickel (TNi) once it is completed by the end of 2018.

Antam, in cooperation with its parent company PT Indonesia Asahan Aluminium (Inalum), will also kick off construction of a new smelter-grade alumina refinery in Mempawah, West Kalimantan, in the second half of this year. The $1.8 billion will generate alumina, the raw material to produce aluminum.

“Antam will focus on expanding its core business and maintaining its financial strength in order to ensure long-term profitability,” Antam finance director Dimas Wikan Pramudhito recently said.

In order to boost its financial health, Antam last year sold its entire 20 percent stake in PT Dairi Prima Mineral (DPM), the operator of lead and zinc mines in North Sumatra, to the latter’s majority owner, PT Bumi Resources Minerals (BRMS). Following the $57.3-million transaction, BRMS now holds full control over DPM.

Last year, Antam’s revenue surged by 38 percent year-on-year to Rp12.55 trillion, 58.7 percent of which came from its gold sales.

Meanwhile, Antam is set to quit the joint venture steel processing firm Meratus Jaya Iron & Steel, claiming the company had no future after it suffered consistent losses since its establishment with state-owned steel manufacturer PT Krakatau Steel.

Antam president director Arie Prabowo Ariotedjo said on Monday that Antam had to quit Meratus because the joint venture had incurred consistent losses since 2013. Meratus even had to halt its production in 2015.

“Because of the losses, our equity has declined to zero,” he said after a meeting with the House of Representatives in Jakarta.

He added that Antam had Rp170 billion (US$11.9 million) in equity plus a shareholder’s loan of Rp30.4 billion. Antam owned 34 percent of Meratus while Krakatau Steel owned the remaining 66 percent.

Both companies began investing in the Meratus project in 2008. The factory, which is located in Tanah Bumbu, West Kalimantan, began operations in 2012.

However, Arie said Meratus had faced several technical disadvantages in its operations – it was located too far from the mine site and to far from the sea, driving up logistics costs, while Krakatau Steel, the buyer of the products, preferred to import similar materials because of the lower prices of imported products.

“Technically, the company (Meratus) has no future. Our choices were to cut our losses or continue to incur losses,” he said. Antam to support Boost Capex by 133 percent Downstream Expansion (lnd, Viriya P. Singgih, bbn, Anton Hermansyah, The Jakarta Post)