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Jakarta Post

Antam races against time to build smelter

  • Stefanno Reinard Sulaiman

    The Jakarta Post

Jakarta   /   Tue, March 19, 2019   /   07:57 am
Antam races against time to build smelter Work proceeds at an office of the state-owned diversified mining company PT Aneka Tambang (Antam). (Tempo/Dasril Roszandi)

Publicly listed diversified mining company PT Aneka Tambang (Antam) is optimistic about finishing the construction of downstream facilities before the relaxation of ore exports ends in January 2022. 

The termination of the relaxation of ore exports could affect Antam’s main commodities, namely nickel and bauxite, the full-year production of which grew by 50 percent in 2018.

Antam finance director Dimas Wikan Pramudhito said recently the company was “racing against time” to complete building all of its smelters and would determine how to finance them. 

“Antam is racing against time with all the resources that we have to focus on how to complete our smelter projects. Our aim is that after 2022, Antam could generate revenue from the downstream business,” he told the press. 

A ban on the export of raw and unprocessed ore was imposed in January 2014 because the government wanted to develop the downstream industry by curbing the export of raw minerals. 

However, three years later in January 2017 the government retracted the policy – arguing that a slump in the price of commodities at that time made it difficult for mining companies to meet their smelter development obligations. 

The relaxation of the ore export ban, which was granted only to mining companies that could show progress building smelters, was enacted under Government Regulation No. 1/2017 on mineral and coal businesses and by ministerial regulations that followed not long after. 

Therefore, the government’s initial goal to prevent exports of unprocessed mineral product would only take effect after 2022, five years after the policy was relaxed.

With a backdrop of regulatory uncertainty, Antam is currently attempting to complete two key processing construction projects, namely the Haltim Ferronickel Plant Development Project (P3FH) in East Halmahera and the Smelter Grade Alumina Refinery (SGAR) Project in Mempawah, West Kalimantan. 

“The P3FH project is set to complete its construction phase this semester and then will be followed by a commissioning test. Only after the test can we start operations,” Dimas said, adding that construction was 92 percent complete in December 2018. 

However, Dimas said the company could only utilize the facility’s maximum capacity of 13,500 tons of nickel in ferronickel (TNi) two years after it starts operation because a trial run of the facility would be conducted first. 

“Hence, we could only produce 5,000 TNi per year for two years after the operational date to reach its maximum capacity,” he said, adding that the project cost about US$250 million. 

Currently the firm, which is listed on Australian Securities Exchange (ASX), has a ferronickel production capacity of 27,000 TNi and with the new facility with a capacity of 13,500 TNi, the total output of ferronickel would be 40,500 TNi per year. 

Previously, Antam president director Arie Prabowo Ariotedjo said the P3FH project, which would boost the company’s ferronickel production capacity by up to 50 percent, was set to complete construction in July. 

“[P3FH] is getting an EPC evaluation and we hope it could kick-off soon. The fastest target [for commercialization] is 2021,” he said. 

Ferronickel would not be affected by the export ban as it is a material processed from nickel and iron ores. For Antam, the commodity was the second-biggest revenue contributor for the company last year at 18 percent. 

Meanwhile, for the SGAR project, Dimas said the firm, along with its parent holding company PT Indonesia Asahan Aluminium (Inalum), has set a target date for the ground breaking this year after the two firms recently set up a joint venture: PT Borneo Alumina Indonesia. 

Antam's future role in the SGAR project in Mempawah is to supply bauxite, which is the raw material for producing alumina. 

“In the project we will open a new mining site [for bauxite] to supply the SGAR when it has start to operate. The amount of investment is estimated to be $50 million,” he said.

Antam is likely to get ore export permits as its smelter construction has met the government’s standards. 

Dimas of Antam, meanwhile, said the company’s progress in its downstream efforts through smelter development have paid off with a series of limited ore export permits granted by the government in the last few years. 

“We are committed to supporting the government’s downstream goal through smelter development and so we have been granted limited ore export permits,” he said. 

Last week, Antam got an additional export quota of 2.7 million tons of nickel ore for this year on the basis of its ferronickel smelter development in Pomalaa, Southeast Sulawesi. 

While mining companies like Antam do not want to gamble on the possibility of the ore export ban being enacted after the relaxation policy ends, the government and lawmakers are still unsure about the policy continuing. 

When asked about the policy continuing, the Energy and Mineral Resources Ministry’s mineral director, Yunus Saefulhak, said legally speaking the relaxation of ore export should be ended in 2022.

“Basically it [the ore export ban] is a law and should be enacted. However, we don’t know if the new government in 2022 would keep the ore export ban or not,” he said. 

Ramson Siagian, a lawmaker from the opposition Gerindra Party, concurred with Yunus, saying it is better for the upcoming government to continue the ban on unprocessed mineral exports as it is in accordance with Law No.4/2009 on mining. 

“[It would be] better that the relaxation [on unprocessed mineral exports] would be revoked after it has ended [in 2022], but I think we should see the situation later,” said Ramson, who is a member of House Commission VII overseeing energy.