The energy and mineral resources (EMR) ministry considered to gives special royalties for low-grade nickel to be processed into raw material for downstream product including lithium batteries - Photo by Bilaterals

JAKARTA (TheInsiderStories) – Publicly listed firm, PT Vale Indonesia (IDX: INCO), has postponed a US$90 million of its Sorowako nickel smelter in South Sulawesi due to logistical issues caused of the pandemic. The two projects, which has been planned since 2017 was due to take five months, will now proceed in May 2021.

The company 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. The miner will make final investment decisions in 2021 for these two new projects, which are currently still at the feasibility study stage, said the finance director, Bernardus Irmanto in a virtual shareholders’ meeting.

Recently, Vale Indonesia has revised its production targets to 73,700 metric tones (MT) nickel in matte from initial planned 71,000 tones nickel in matte due to the higher demand. The amount higher four percent than production in 2019.

Nico Kanter, president director and CEO of the company, said on August 26, the increase in nickel matte production also affected by the increased in smelter energy consumption. In the second quarter (2Q) of 2020, the producer and its subsidiaries’ production reached 18,701 MT of nickel in matte and shipments of nickel matte of 19,887 tons.

With this production, Vale Indonesia booked sales of US$185.7 million. Production of nickel in matte and deliveries in 2Q of 2020 were respectively about 6 percent and 19 percent higher than the production and deliveries volume realized in 1Q 2020. While, production and deliveries in 1H pf 2020 were 18 percent and 19 percent higher than production and deliveries in 1H 19, respectively.

Despite a lower average realized nickel price in 2Q 2020, about 11 percent lower than 1Q 2020, the delivery of higher nickel matte volumes resulted in the period showing a 6 percent increase over previous quarter. In the same period, the group recorded EBITDA of $59.4 million or slightly higher than the 1Q 2020 of $54.9 million, mainly driven by higher sales.

INCO also recorded positive earnings of $24 million in 2Q of 2020, a decrease from earnings of $29 million in 1Q 2020, mainly due to lower finance income and income tax benefit. However, it was significantly higher than in the same period last year when the group recorded a net loss of $26.2 million. The group’ cost of revenue in 2Q 2020 increased by 7 percent to $165.6 million from $154.1 million in 1Q20.

in 2Q of 2020, the miner has disbursed around $44.3 million in capital expenditure, an increase from $33.0 million in 1Q 2020. As reported, on June 19, 2020, the issuer was informed that its shareholders, Vale Canada Limited and Sumitomo Metal Mining Co., Ltd had signed definitive agreements for the sale of a 20 percent stake to PT Indonesia Asahan Aluminium (MIND ID).

The deal is in compliance with Vale’ divestment obligation under the Contract of Work (CoW) dated Jan. 15, 1996 with the government of Indonesia. The signing of the agreements is a continuation of the heads of agreement which was previously signed on Oct. 11, 2019. Based on the CoW, divestment is one of the requirements for its continuity of operations beyond 2025.

At the virtual public expose, he also mentioned, that the company delaying the furnace rebuild from earlier is scheduled to begin in the fourth quarter of this year to the second quarter of next year. He assured that that the delaying will not have an impact on the company’ nickel production in 2021.

Vale Indonesia operates the world’ largest integrated laterite nickel mining and processing operation in Sorowako, located around 600 kilometers north of Makassar City, the provincial capital.

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