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Antam sales plunge on weaker gold price, ore export ban
State-owned diversified miner Aneka Tambangâs (Antam) sales plunged in the first half year-on-year (y-o-y) as prices of its main commodities remained bearish, while its revenue took a beating by the mineral ore export ban
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State-owned diversified miner Aneka Tambang's (Antam) sales plunged in the first half year-on-year (y-o-y) as prices of its main commodities remained bearish, while its revenue took a beating by the mineral ore export ban.
Antam published its quarterly report indicating that its sales between January and June dove by about 35 percent to Rp 3.99 trillion (US$ 338 milion), compared to the Rp 6.12 trillion it generated in the same period last year.
Antam's corporate secretary ,Tri Hartono, attributed the plummeting sales to the unfavorable commodity market and the government's move to ban ore exports in a move to shift to the value-added industry.
'The declining sales are in line with plunging rates of Antam's main commodities, namely gold and nickel, and the government's policy to restrict the export of raw ore,' Tri explained in a statement.
Gold remained the company's biggest contributor to its total sales with Rp 1.95 trillion, or about 49 percent of the total figure.
Gold contribution to the firm's first-half sales, however, was 31 percent lower than the Rp 2.82 trillion recorded in the first half of last year, attributed to not only the lower selling prices but also to a slight drop in production and sales volume.
Antam's gold production decreased 7 percent y-o-y to 1,172 kilograms during the first half of the year due to lower grade ore from the Pongkor mine in West Java and the Cibaliung mine in Banten.
The production decline further led to a 29 percent y-o-y sales volume fall to 3,926 kg during the period.
Antam's average gold selling price fell 20 percent to $1,319.72 per ounce, compared to $1,641.55 per oz in the first six months of last year.
According to Bloomberg, prices in the benchmark gold prices in New York tumbled 28 percent last year, the most in three decades as investors withdrew from the safe haven on expectation that the US Federal Reserve would reduce stimulus as the economy improved.
The appeal of gold as a haven increased earlier this year after Russia backed a rebellion in the Ukraine, and as violence escalated in the Middle East and North Africa, but its prices had declined by 7.9 percent by the end of July from a 2014 peak in March.
Meanwhile, ferronickel replaced nickel as Antam's second-biggest sales contributor after gold, contributing about 44 percent of the total figure with Rp 1.74 trillion, supported by rising prices of the commodity, as well as increasing sales volume.
The value of ferronickel sales rose by about 58 percent compared to the first half of last year, while its sales volume was up by 27 percent to 8,900 tons of nickel in ferronickel (TNi). Its price was up by 5 percent y-o-y to $7.58 per pound.
Antam's nickel sales, on the other hand, fell headlong from Rp 4.5 trillion in the first half of last year to Rp 89 billion this year.
In line with the implementation of the government's mineral ore export ban earlier this year, Antam's nickel ore production was largely used to supply the company's ferronickel smelter.
'Antam will continue to focus on expanding our ferronickel business, while at the same time attempting to reduce production costs,' Tri said.
Antam has secured a $100 million credit facility in May from state-run Eximbank to complete the expansion of its Pomalaa ferronickel plant in Southeast Sulawesi on time by September next year.
The $573 million project was expected to increase the ferronickel smelter's production capacity to between 27,000 and 30,000 TNi from between 18,000 and 20,000 TNi previously.
