The Jakarta Post
State-run diversified miner Aneka Tambang announced Monday that its newly built chemical grade alumina (CGA) plant in Tayan, West Kalimantan, is now ready to cater to domestic and export markets, particularly Japan.
The new facility is also prepared to start bringing additional cash into the company, up to US$200 million a year.
An official statement published on the Indonesia Stock Exchange (IDX) website said that the CGA plant has started commercial operations after four years of construction.
According to the company, the facility would be a milestone in its business diversification effort as well as a strategic move to boost income following the banning of raw ore exports in early 2014.
'The commercial operation [to produce chemical grade alumina] is an addition to our existing processed commodities, which are nickel, gold, silver, coal and alumina. This operation also reflects our commitment toward the development of value-added downstream commodities,' the statement added.
Antam started construction of the CGA facility in April 2011, through its subsidiary PT Indonesia Chemical Alumina (ICA), as a joint venture between the publicly-listed miner and Japanese chemical engineering firm Showa Denko KK (SDK).
Antam holds an 80 percent stake in ICA, whereas SDK holds the remainder.
The plant, which cost up to $490 million in investments and was commissioned last October, is designed to produce 300,000 tons of chemical grade alumina per annum, with raw materials from Antam's massive bauxite reserves in Tayan.
CGA is a raw material used for functional and electronic components such as refractories, abrasives, building materials, integrated circuits (IC) and liquid-crystal display (LCD) screens.
Antam corporate secretary Tri Hartono told The Jakarta Post over the phone that Antam anticipated producing between 120,000 tons and 150,000 tons during the facility's first year of operation and expected it to run at its full capacity next year.
Once the facility runs at full capacity, Tri said the Tayan plant was expected to generate about $200 million annually for the company.
'As part of our offtake agreement, SDK will absorb 70 percent of the production from the facility, while the remaining 30 percent will be marketed in the Indonesian market and sent as exports to other countries, besides Japan,' he explained.
Antam is looking to diversify its revenues through the processing business after realizing that the ore exports ban ' as an implementation of the 2009 Mining Law ' had caused losses to the company through declining nickel sales. Nickel used to be one of the company's greatest revenue contributors.
Antam reported recently that its unaudited sales for 2014 were Rp 9.46 trillion ($741.67 million), lower by around 16 percent compared with the Rp 11.29 trillion generated in 2013.
Following the ore export ban, Antam lost 98 percent of its 2014 nickel sales of around Rp 4.08 trillion, leaving the company with only Rp 89 billion, and saw its nickel production fall by around 90 percent to 1.14 million wet metric tons.
In coping with the regulation, Antam is expected to increase the annual production at its Pomalaa facility in Southeast Sulawesi to between 27,000 and 30,000 nickel tons in ferronickel (TNi) from previous production levels of 18,000 to 20,000 TNi, the expansion of which is slated to conclude this year.
Antam is also looking to work on several downstream projects, including to develop its smelter grade alumina (SGA) plant in Mempawah, an anode slime facility in East Java, as well as a ferronickel plant in East Halmahera, Maluku.
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