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tate-owned miner PT Aneka Tambang (Antam) is mulling over plans to obtain up to US$250 million in fresh funds this year to finance its Pomalaa ferronickel plant expansion in Southeast Sulawesi, which is expected to boost the company'€™s nickel output by nearly 40 percent.

The $573 million expansion project, which is being developed gradually in eight stages, was 33 percent complete at the end of last year. Antam expects to fully commence all operations in Pomalaa in the second quarter of 2015 and to increase output to between 27,000 and 30,000 tons of nickel in ferronickel (TNi). It currently produces 18,000-20,000 TNi in the plant, according to the company'€™s annual report.

The publicly listed company was deliberating to source the funds from either issuing bonds, offering a rights issue or seeking bank loans, Antam finance director Djaja Tambunan said on Wednesday.

'€œWe need funds ranging from $200 to $250 million for the project. The most feasible option is to get the funding from bank loans, most possibly from local banks,'€ Djaja said, reasoning that the company'€™s stock prices and debt ratings have not been performing well enough to raise funds from the market.

Antam, however, has proposed to the State-Owned Enterprises Ministry to offer rights shares, as it keeps options open and continues to weigh on other possibilities to source the funds required for the expansion project, according to him.

'€œIf our stock prices are not supportive, however, we might have to drop the option,'€ Djaja added.

Antam'€™s shares closed at Rp 1,145 on Wednesday, unchanged from the previous day. The stock has slumped about 18 percent in the past one year, worse than the broader benchmark Jakarta Composite Index'€™s (JCI) 2.35 percent drop. It has gained 5.04 percent so far this year, but still underperforming JCI'€™s 10.6 percent increase.

Djaja said that ratings agencies'€™ consideration to downgrade the company'€™s credit rating might undermine the company'€™s plan to raise funds from the bond market.

International rating agencies Moody'€™s Investors Service and Standard & Poor'€™s Rating Services said in January that they were reviewing Antam for a possible credit rating downgrade over potential losses due to the government'€™s ban on mineral ore exports, Reuters reported.

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

On Jan. 12, the Indonesian government put into force a full ban on raw mineral ore exports as stipulated by the 2009 Mining Law. The law requires miners to build domestic processing facilities in a bid to add value to the country'€™s downstream industry.

Antam president director Tato Miraza said that the regulation might result in $350 million-$400 million in potential losses for the company this year, increasing the possibility of a ratings downgrade, as about 35 percent of company'€™s revenue in the last two years came from nickel sales.

'€œWe have, however, prepared strategies to mitigate the potential loss by tightening efficiency in conducting projects, investments and operation. We are also looking to diverse sales to coal and alumina and boosting our gold sales,'€ he said.

'€œWe hope our alumina project in Tayan [West Kalimantan] starts producing 130,000 tons to 160,000 tons of alumina five to six months after construction concludes next month.'€

Late in October, Antam, with its Japanese partner, Showa Denko K.K., officially commenced operations at its Tayan chemical-grade alumina (CGA) plant, worth $490 million in investment. The plant will produce 300,000 tons of alumina per year with 200 types of products, of which about 200,000 tons will be exported to Japan and the remaining 100,000 tons will be sold in the domestic market and other markets outside Japan.