Indonesia's Antam eyes expansion into coal mining
By Fitri Wulandari
JAKARTA, Sept 17 (Reuters) - Indonesian state-owned miner, PT Aneka Tambang Tbk (ATM.AX) (ANTM.JK), is considering acquiring coal mines to diversify its operations and to meet growing energy needs for its nickel production, its president director said.
The company expects coal consumption to rise significantly when it completes a new power plant near its nickel mine in Pomalaa in Sulawesi island, Alwin Syah Loebis, Antam's president director, told reporters.
"We want to secure coal supply while our consumption is growing when the power plant completes," Loebis said late on Tuesday.
"But if we can sell the coal, we will sell it," he added, noting the company was reviewing a number of coal mines in Sumatra and Kalimantan.
The company consumes about 200,000 tonnes of coal a year to power its ferro-nickel smelters but that may grow to at least 3 million tonnes once the new power plant is completed, he said.
The $350 million coal-fired power plant, due to be built under a joint venture with an independent power producer, will have a 150 megawatt capacity and construction is due to start in 2010 and take between 18 and 24 months, the firm has said.
Falling nickel prices and rising energy costs have prompted Antam to cut costs and increase nickel sales to boost revenue.
Antam's revenue in the first six months of this year fell 7 percent to 5.570 trillion rupiah ($589.4 million) from a year ago, hit by weakening nickel prices.
Average prices of ferro-nickel received by the company in the first half plunged 31 percent to $12.38 per pound compared to $17.93 per pound in the same period last year.
Weak demand for nickel MNI3, widely used in kitchen appliances and cutlery, has seen prices tumble by around half from the year's high of $34,700 a tonne hit in early March on the London Metal Exchange.
Nickel prices at the London Metal Exchange ended down $705 at $17,400 a tonne or $7.89 per pound on Tuesday.
But Antam expects prices to recover by end of this year.
"We're still optimistic nickel prices will recover in the last quarter," Loebis said, forecasting average nickel prices at $10-$11 per pound this year and between $10-$12 next year.
The company has revised up its sales target to 18,000 tonnes of ferro-nickel this year, compared with an initial target of 17,000 tonnes.
As of the end of August, the company has shipped 14,000 tonnes of ferro-nickel, Loebis said.
Antam sold 17,723 tonnes of ferro-nickel in 2007.
The firm planned to appoint in November financial advisers to help arrange a share buy-back, Loebis said, adding the company will use some of its internal cash of $360 million for this.
Antam, 65 percent-owned by the Indonesian government, is involved in the exploration and production of nickel ore, smelting of ferro-nickel, as well as the exploration and production of refining gold and silver, bauxite and iron sands. (Editing by Ed Davies)
