S

tate-owned diversified miner Aneka Tambang (Antam) is upbeat that it can deliver brighter results in commodity sales throughout 2017 following the government’s recent decision to relax an export ban on low-grade nickel.

“We believe that our sales will only get better in 2017 because there has been an increase in capacity at our ferronickel plant. Moreover, we currently have a chance to export low-grade nickel once again,” Antam marketing director Hari Widjajanto told The Jakarta Post on Wednesday.

Earlier this year, the government decided to relax the export ban for low-grade nickel with content below 1.7 percent, along with copper concentrates and washed bauxite in return for commitments from miners to convert their contracts of work (CoWs) into special mining licenses (IUPKs) and to develop new smelters within five years.

Antam was one of big players affected by the export ban, which forced the company to see a significant decrease in revenues, especially because it was not able to export nickel to Japan, its long-time partner.

The revamped policy, however, contravenes the 2009 Mining Law, which imposed a total ban on such mineral ore exports in 2014 in a bid to strengthen the country’s processing industry.

In October 2016, Antam completed the expansion of its Pomalaa ferronickel plant in Southeast Sulawesi, which increased the facility’s production capacity to between 20,000
tons and 30,000 tons from a previous capacity of 18,000 tons to 20,000 tons.

It expects the upgraded plant to reduce production costs by 20 percent, guaranteeing a more solid financial performance in the long run.

It also signed a turnkey contract worth Rp 3.43 trillion (US$256.95 million) late last year for the first development phase of its new ferronickel smelter in East Halmahera, North Maluku.

Under the contract, an incorporated consortium consisting of state-owned construction firm Wijaya Karya (WIKA) and Japanese manufacturer Kawasaki Heavy Industries will prepare the basic design of and construct Antam’s new smelter, which is slated for completion by the end of 2018 with an annual capacity of 13,500 tons of nickel contained in ferronickel (TNi).

Throughout 2016, Antam mined 1.63 million wet metric tons (wmt) of nickel ore, which was partly used to produce a total of 20,293 TNi, up 18 percent from 2015. It produced 241,202 wmt of bauxite as well, up 19.7 percent annually.

It booked Rp 9.11 trillion in net sales, a 13.5 percent drop from 2015. The company was able to sell 360,746 ounces of gold and 20,888 TNi, which accounted for 61 percent and 31 percent of its total sales, respectively.

Meanwhile, Bahana Securities analyst Andrew Franklin Hotama said Antam would flourish with the newly-launched relaxation policy as the company had mounting stocks of low-grade nickel and bauxite.

“Bahana believes the company can export more than 1 million wmt a year. It could secure additional profits of Rp 320 billion,” Andrew said in a statement on Tuesday.

However, he also warned that the relaxation policy could lead to a significant drop in the global nickel price to around $9,500 per ton this year compared to the high price of $11,589 per ton recorded in 2016, as the reopening of the export tap will cause supply to outstrip demand.