PT Vale Indonesia Tbk (IDX: INCO) reported a 10 percent increase in production to 55,792 metric tones (MT) of nickel in nine months (9M) compared to last year - Photo by the Company

JAKARTA (TheInsiderStories) – The miner, PT Vale Indonesia Tbk (IDX: INCO) reported a 10 percent increase in production to 55,792 metric tones (MT) of nickel in nine months (9M) compared to last year 50,531 MT of nickel. With the realization, the company is optimistic to reached its production targets of 73,000 MT of nickel by the end of 2020.

“Especially in the third quarter of 2020, the production volume increased 4 percent, compared to the second quarter of 2020,” said the CEO and president director, Nico Kanter in an official statement on Monday (10/19).

He also assured, Vale Indonesia aims to meet all the requirements for the Pomalaa smelter project in Southeast Sulawesi and Bahodopi in Central Sulawesi in the 1H of 2021. The company estimates that the investment for the two smelter projects around US$4 billion.

Earlier, finance director of the company, Bernandus Irmanto said, the Pomalaa project is in the process of completing a final investment decision and in the middle of equating views and meeting the requirements for the strategic partners. In the project, the miner is collaborating with Japan’ Sumitomo Metal Mining.

He estimates that the smelter project need costs around $2.5 billion. While, the Bahodopi project, still preparing the requirements of a final investment decision and arranging permits. Vale Indonesia will partner with investors from China in the smelter project.

The investment values of Bahodopi project is around $1.5 billion. Now, the company focused on the operating of a smelter factory in Sorowako, South Sulawesi. The company aims to increase the plants production capacity in Sorowako to 90,000 MT of Nickel before 2025.

Currently, Vale Indonesia has postponed a $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.

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.

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.

The miner 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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