“The plant needs $58.8 million in investment. We have secured $37 million in loans from Bank Permata to partly finance the construction of the plant,” MNK president director Judiono said in Jakarta on Tuesday, adding that the rest of the funds would come from the company’s internal sources including fresh funds from shareholders.

MNK Technical and Production director Yayan Mulyana said that the construction of the plant had been started since October last year and it was expected to begin commercial operation by the end of the second quarter of 2011.

“The basic design was made by contractors from Tunisia and Calcutta, while the detailed designs are by local contractor PT Inti Karya Persada,” Yayan said.

Ammonia nitrate is one of basic raw materials to produce explosives for mining activities.

The new ammonia nitrate plant is designed to produce 100,000 tons of ammonia nitrate a year. At present, MNK produces about 37,000 tons a year.  

MNK produces and imports ammonium nitrate to meet local demand. The company also offers
mining services and blasting accessories like detonators, bolsters and power gels.

“However, despite the projected increase in production, we still need to import from India, France, Thailand and South Africa to meet the local demand,” he said.

MNK sold 194,262 tons of ammonia nitrate material last year, an increase of about 28 percent
from 2008.

The company sells ammonia nitrate to several big mining companies like PT Newmont Nusa Tenggara and PT Freeport.  “We provide both Newmont and Freeport with about 40,000 metric tons of ammonia nitrate each, a year,” he said.

According to Judiono, the demand for ammonia nitrate in the country is expected to increase to about 450,000 tons this year from 420,000 tons in 2009. “I believe the demand for ammonia nitrate will grow by about 8 percent annually, in line with increasing mining activities,” he added.

The company is a subsidiary of PT Ancora Indonesia Resources. Besides MNK, Ancora also has another subsidiary PT Bormindo Nusantara which provides leasing services for rig equipment.

Last year, Ancora booked a 15 percent growth in net profits rising to Rp 18.7 billion, while total sales grew by 28 percent to Rp 1.3 trillion. MNK and Bormindo contributed larger parts of the profits.

“MNK contributed 60 percent of the gross profits of Ancora from its ammonia nitrate sales,” Ancora president director Dharma Djojonegoro said.

Ancora also plans to further expand its coal mining operation by acquiring a new coal mine to take advantage of rising coal demand both at home and overseas.

“We are targeting a coal mine with reserves of between 30 and 50 million tons,” he said.

At present, Ancora produces only about 192,000 tons of coal a year.

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