UPDATE 1-Indonesia's Antam targets gold sales jump after nickel ore export ban

Wed Jan 15, 2014 5:44am EST

Related Topics

* Antam eyes 13 tonnes in gold sales this year vs 9-10 in 2013

* Moody's, S&P reviewing Antam for possible downgrade

* Antam may lose $300 mln in revenue this year due to export ban - Moody's (Adds executive's quotes, Antam's debt details, share moves)

By Fathiyah Dahrul and Eveline Danubrata

JAKARTA, Jan 15 (Reuters) - Indonesian state-owned miner PT Aneka Tambang (Antam) is targeting a 30 percent rise in gold sales this year which it hopes will ease the impact of a new nickel ore export ban, its finance director told Reuters on Wednesday.

A step-up in gold sales, however, may have limited impact on the company's ability to service debt, even as its credit rating is at risk of being downgraded by ratings agencies.

"This year will be one of the most challenging years in the history of Antam, depending on the market prices," Djaja Tambunan said. "If nickel prices are above $7.50 (per pound), it would not be too tough for us."

Three month nickel is trading around $14,245 a tonne, or $6.46 a pound, on the London Metal Exchange.

Indonesia halted mineral ore exports on Sunday in an attempt to promote domestic processing, but threatening the country's nickel and bauxite industries worth more than $2 billion in annual shipments.

Antam, which is 65 percent government-owned, also produces gold, bauxite and coal. It was established in 1968 from a merger of several state-owned mining companies and projects.

Antam expects to sell 13 tonnes of gold this year, compared to up to 10 tonnes in 2013. It projects capital expenditure of 2.8 trillion rupiah ($232.4 million), compared with 2 trillion rupiah last year, as more projects come onstream.

"The gold sales that we are raising will help us," Tambunan said. "We have other businesses, so our portfolio is quite wide."

Moody's Investors Service and Standard & Poor's Rating Services said on Tuesday they are reviewing Antam for a possible credit-rating downgrade. All of Antam's nickel ore sales are generated through exports and the company could lose around $300 million in revenue this year due to the ban, Moody's said.

If the Indonesian government implements a blanket ban that lasts the full year, S&P forecast Antam's ratio of debt to EBITDA (earnings before interest, taxes, depreciation and amortisation) to worsen to more than 10 times.

"We expect Antam's EBITDA to more than halve in 2014 if the ban lasts for the full year because we anticipate that nickel ore operations will account for a large proportion of the company's overall EBITDA and cash flows," S&P said.

Antam's debt of immediate concern includes a 2.4 trillion rupiah short-term bank loan, a 1.3 trillion rupiah investment loan and 3 trillion rupiah of bonds outstanding, according to the company's latest results ended September 2013.

The company also has guaranteed loans taken by its joint venture PT Indonesia Chemical Alumina. These borrowings have net worth, debt service coverage and debt-to-EBITDA ratio conditions and a continued ban on nickel ore exports could trigger a breach of these conditions.

Antam shares have risen around 1 percent since the export ban was implemented on Jan. 12. But the stock has fallen nearly 8 percent since the start of the year, faring worse than the broader Jakarta stock exchange, which has gained around 4 percent. ($1 = 12,050 rupiah) (Additional reporting by Umesh Desai in HONG KONG, Melanie Burton in SYDNEY; Editing by Jonathan Thatcher and Muralikumar Anantharaman)

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