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Jakarta Post

Metal miner Antam allocates $5.5m for exploration amid dwindling gold reserves

  • Norman Harsono
    Norman Harsono

    The Jakarta Post

Jakarta   /   Tue, July 7, 2020   /   08:27 am
Metal miner Antam allocates $5.5m for exploration amid dwindling gold reserves The Pomalaa nickel smelter in Kolaka, Southeast Sulawesi, operated by state-owned metal miner PT Aneka Tambang (Antam), is pictured in this undated file photo. (Handout/Antam)

National diversified miner PT Aneka Tambang (Antam) has set aside Rp 80 billion (US$5.54 million) this year to find new gold, nickel and bauxite deposits amid dwindling reserves.

The funds, 56 percent of which had been used as of May, would be used for exploring existing mining sites (IUP) for new deposits, Antam corporate secretary Kunto Hendrapawoko told The Jakarta Post on July 3.

He named gold mining sites at Mount Pongkor in West Java and in Cibaliung, Banten, as areas of particular focus for finding gold deposits.

“Antam actively continues exploring for reserves and gold resources,” he said via email.

Read also: Gold price up 20 percent so far this year as investors turn to precious metal to protect wealth

However, the metal exploration fund makes up a relatively small 5.3 percent of the company’s total Rp 1.5 trillion in capital expenditure for this year. Most of the funds were earmarked for two multimillion-dollar metal smelter projects in North Maluku and West Kalimantan.

Antam’s parent company, MIND ID, raised the issue of dwindling gold reserves during a hearing with lawmakers at the House of Representatives in Jakarta on Tuesday.

“PT Antam’s gold reserves, in two to three years, will be on the wane,” said MIND ID president director Orias Petrus Moedak at the hearing.

MIND ID, a holding company for all national miners, is concerned about Antam’s gold reserve count as the precious metal is one of its best-selling products, particularly during COVID-19, as people hoard gold as a safe-haven asset.

Gold prices are projected to rise 15 percent year-on-year to $1,600 per troy ounce in 2020, according to the World Bank’s estimate. The prices of coal, tin, aluminum and nickel, all of which are top MIND ID products, are expected to slump in comparison.

“We need serious efforts to explore gold reserves from Antam or from an exploration company working with Antam,” added Orias.

Read also: ‘A shock like no other’: Commodity slide to pressure Indonesia

Due to weak commodity prices, he expected MIND ID to fall short of its year-end profit target of Rp 2.1 trillion. Thus, the holding company has rolled out cost-cutting measures.

Publicly listed Antam itself booked an Rp 281.83 billion net loss from January to March this year, turning around an Rp 176.1 billion net profit from the same period last year, due to weak prices.

Gold, nickel and bauxite contributed to over 80 percent of the company’s Rp 6.2 trillion sales in the first quarter. The precious metal alone contributed over 60 percent.

Shares in Antam, traded at the Indonesia Stock Exchange under the code ANTM, rose 6.67 percent on Monday to Rp 640 apiece, as the broader benchmark Jakarta Composite Index (JCI) increased 0.3 percent during the day. So far this year, the company’s stocks have fallen 23 percent, in line with the JCI’s 20 percent drop during the same period.