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Nickel producers cut output
The country's two biggest nickel producers have cut 2009 production targets as nickel prices have plunged while the global economic downturn has reduced demand
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The country's two biggest nickel producers have cut 2009 production targets as nickel prices have plunged while the global economic downturn has reduced demand.
State mining company PT Aneka Tambang cuts its production target by almost 30 percent to 12,000 tons for next year on lower demand, president director Alwin Syah Loebis said Wednesday.
Alwin said in a presentation that global consumption of nickel would go below 1 million tons next year from 1 million tons this year, in particular because of the forecast reduction in world economic growth.
The decision to cut the production target was also taken because of rising production costs.
Alwin reported that as of the end of October, production costs reached US$5.69 per pound, while the sales price of nickel was around $4.70 per pound.
Bloomberg reported that nickel on the London Metal Exchange lost 60 percent this year, the biggest decline among the six primary metals traded on the exchange.
"Because of the prices, we decided to cut production and repair our smelters," Alwin added.
Corporate secretary Bimo Budi Satriyo said that it was probable the company would suffer a financial loss in the fourth quarter.
In the first nine months of the year, the company booked a net profit of Rp 1.62 trillion, a 58 percent drop compared to Rp 3.8 trillion in the same period last year.
For next year, the company aims to spend Rp 3.02 trillion in capital expenditure, up from Rp 758 billion this year. Next year's budget will be allocated to routine current expenditure (Rp 427 billion), development (Rp 1.5 trillion) and investment on exploration (Rp 1.01 trillion).
Meanwhile, PT International Nickel (Inco) Indonesia cut this year's production target by 20 percent to 70,000 tons, following its decision to shut down its diesel-fired power plants after production costs rose.
Inco has several power plants with a total capacity of 360 megawatts, of which 85 megawatts are fired by fuels and 275 megawatts by hydro power.
Concerning next year's projections, both companies are optimistic that nickel prices in the second semester of 2009 will rise as demand should start to recover in the second half of the year.
Analysts have said that the recovery of nickel prices may be primarily driven by stronger demand from stainless steel makers, who will opt for nickel rather than chrome, since the price of chrome has steadily increased. (dis)
