The Jakarta Post
Publicly listed nickel mine operator PT Vale Indonesia (INCO) saw its profits plunge 96.2 percent year-on-year to only US$1.9 million in 2016, due to a 22 percent drop in the global nickel price throughout the year.
At the same time, the company’s revenue plummeted 26 percent annually to $584.14 million, even though it was able to reduce its cost of revenue by 18 percent to $550 million.
The positive trend in cost of revenue was triggered by lower cost of fuels and supplies, as well as services offset to a lesser extent by higher employment, depreciation, amortization and depletion costs. Fuel costs, which decreased by 38 percent, accounted for more than 47 percent of the company’s drop in cost of revenue.
(Read also: Nickel miner Vale continues to cut costs)
“This experience underlines the importance of remaining focused on optimizing production capacity, improving efficiency and reducing costs. We believe the nickel price in 2017 will remain low considering the high inventory levels on the London Metal Exchange [LME] and Shanghai Futures Exchange [SHFE],” Vale CEO and president director Nico Kanter said on Thursday in a statement.
“There is also uncertainty in the global nickel market over whether the Indonesian ore export quota will add additional volume or simply replace a diminishing ore supply from the Philippines to China.”
Vale’s earnings before interest, taxes, depreciation and amortization (EBITDA) stood at $135.0 million in 2016, around 74 percent of which was generated in the second half of the year. Meanwhile, the company’s cash and cash equivalents were $185.6 million. (bbn)
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