JAKARTA (TheInsiderStories) – A nickel miner, PT Vale Indonesia Tbk (IDX: INCO), preparing funds of US$152 million to execute furnace and other projects in this year. At the same day, the company also reported the net profit jumped 44.28 percent to $82.82 million from 2019 at $57.40 million.
Nico Kanter, CEO and president director of the issuer explained, the furnace project is estimating need funds around $70 million. As reported, the producer has postponed a its Sorowako nickel smelter in South Sulawesi due to logistical issues during the pandemic. The two projects, which has been planned since 2017 will now proceed on May 2021.
Vale Indonesia is reportedly in talks with Chinese investors over the development of the ferronickel in Bahodopi and with Japan’ Sumitomo Metal over the High Pressure Acid Leaching in Pomalaa. With this project, he adds, the company’ production volume will be lower than 2020 and 2019.
Last year, the company produced 72,237 tones of nickel in matte (TNi) or slightly rose by 2 percent compared to 2019′ achievement of 71,025 TNi and lower from the initial target 73,000 TNi. In the fourth quarter of 2020, the production dropped by 16 percent from 19,477 TNi to 16,445 TNi.
The result is also 20 percent lower than production in the same quarter of 2019 at 20,494 TNi. The declined due to maintenance activities and decrease in average selling price from $10,855 a TNi to $10,498 per TNi. Due to the lower sale price, INCO‘ revenues fell by 2 percent to $764.7 million from the previous year of $782 juta.
The new unit of state firm, PT Indonesia Asahan Aluminium operated the world’ largest integrated laterite nickel mining and processing operation in Sorowako. The new parent became the new shareholders of the miner after signed a share sale on June 19, 2020, with Vale Canada Ltd., and Sumitomo Metal Mining Co., Ltd.
The deal is in compliance with Vale’ divestment obligation under the Contract of Work with the government. Based on the contract, the divestment is one of the requirements for its continuity of operations beyond 2025. Joined with its sister company, PT Aneka Tambang Tbk (IDX: ANTM), both parties collaborating to build smelter with total cost $5 billion.
According to the vice president director of INCO, Febriany Eddy, the investment funds will be used to develop two new smelters in Bahodopi, Morowali, Central Sulawesi and Pomalaa in Southeast Sulawesi. Bahodopi smelter will have output 700,000 tons per annum. Inline with the smelter development the company has pocketed exploration permit and now waiting for the exploitation permit and the contract extension.
While, smelter and mines in Pomalaa is estimating need investment $2.8 billion and project in Bahodopi need costs up to $2.1 billion, including mines. As for expansion in the existing projects, Sorowako need funds $400 million. The construction of the smelter is expected to reduce exports of raw minerals and reduce dependence on imports for sources of raw materials for aluminum production.
Indonesia is rich in mineral deposits. There are currently six new high-pressure acid leaching plants around the world that can produce 220,000 tons of battery-grade nickel a year, 70 percent of which are deployed in Indonesia. Chinese companies have also seized the opportunity to develop the Indonesian nickel market, the report said.
President Joko Widodo’ government is planning to spend billions of dollars building aluminum and nickel smelters at home as it seeks to reshape the domestic mining industry and curb exports of raw materials while reducing its dependence on imports of finished metals. This because Indonesia’ own mining raw materials have been exported for decades, forcing the Southeast Asia biggest economy to rely on costly imports to meet demand.
Indonesia is likely to impose a ban on raw ore exports in 2022, pushing miners to process minerals at home. Under the 2017 mining regulations, Indonesia plans to suspend exports of raw ore on January 12, 2022, after giving miners five years to build smelters in the country.
It is expected that 41 smelters will operate in 2022, including 22 nickel smelters, six bauxite smelters, four iron ore smelters, four zinc smelters, two copper smelters, two anode slime smelters, and one manganese ore smelter.
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