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xpecting to deal with another turbulent year, major nickel miner PT Vale Indonesia is seeking to push for cost-efficiency measures and increase its production target slightly this year.

The company, listed on the bourse as INCO, believes the business outlook for this year will remain challenging as nickel prices continue to be volatile, which it attributes mainly to the government’s restriction of ore exports and external economic conditions.

The price of fuel, including coal, a key component in Vale’s production, will also be unpredictable, adding to the pressure on its business throughout the year.

“Energy costs represented about 30 percent of our cash costs,” Vale finance director Febriany Eddy said after its annual general shareholders meeting on Wednesday.

Despite a 10 percent increase in average nickel prices in the past year, Vale posted a net loss of US$15.27 million as the costs of oil and coal jumped by 36 percent and 39 percent, respectively, on a unit cost basis. The figure compares to its net profit of $1.91 million in 2016.

Despite the significant energy costs, Vale was optimistic that its business would still have good prospects in 2018 as nickel prices already improved as of the first quarter of this year, reaching $13,000 per ton on average.

“We hope that the surge in nickel prices can offset coal and oil prices,” Febriany said.

The company, a subsidiary of Brazil’s mining giant Vale SA, expects to produce 77,500 tons of nickel in matte this year, up slightly from 76,807 tons last year.

In order to save costs, it plans to use coal instead of oil in its reduction kilns at its production facility in Sorowako, South Sulawesi.

“Of our five kilns, only one uses coal. This month, we will install another [coal-fired] one,” she said.

Febriany said that this strategy had borne fruit as Vale was able to save $23 million last year by shifting from oil to coal.

Despite an expected continuous increase in nickel prices and its cost-efficiency measures, the government policies were likely to hamper the company’s business, said Vale’s president director Nico Kanter.

“The government’s policy will always be a challenge for us […] as we can see this year, permits for how many exports have been granted by the government? For more than 30 million tons [of nickel ore],” he said.

In 2017, the government relaxed the mineral export ban for, among other commodities, low-grade nickel ore with less than 1.7 percent nickel content, in exchange for miners’ commitment to developing new smelters.

According to Vale, this policy could increase supply in overseas markets, such as China, and push down nickel prices. It also reduces the incentives for investors to build smelters in Indonesia because the ore supply in the global market will be abundant.

Vale has allocated a capital expenditure (capex) of $95 million for this year, much higher than $68 million it spent in the past year. It will rely on its internal cash to meet this year’s capex.

Most of it will be used for business development, while the remaining $18 million will be targeted at periodic maintenance of production plant.

During its annual general shareholders’ meeting, Vale’s shareholders accepted the appointment of Eduardo Bartolomeo as its president commissioner. The composition of its board of directors remained the same.

Considering the company’s bleak financial performance last year, it decided not to pay out dividends this year.