Publicly listed state-owned metal miner PT Aneka Tambang (Antam) has seen its net profit sink 80 percent year-on-year (yoy) to Rp 84.8 billion (US$5.82 million) in the first half of the year, dragged down by poor nickel and ferronickel sales but anchored by gold sales, according to its half-year financial report.
Antam’s revenue fell 36 percent to Rp 9.2 trillion, while its costs fell by nearly the same percentage at 35.6 percent to Rp 7.9 trillion over the same period.
“Antam’s reported financial performance has been in decline throughout the PSBB, especially its net profit. [...] Antam has been more reliant on its gold bar volumes," analyst Nafan Aji of Binaartha Parama Sekuritas told The Jakarta Post on Tuesday.
He was referring to the large-scale social restrictions policy that was introduced in four months ago in response to the COVID-19 health crisis.
Technically a partial lockdown, several regions across the country implemented the PSBB in early April in an effort to curb the spread of the coronavirus. The restrictions included self-quarantine, work from home and study at home policies, as well as enforced the temporary closure of offices, retail outlets and factories.
In early June, despite record numbers of COVID-19 cases per day, the government started easing the PSBB to gradually reopen the economy to cushion the economic impacts of the epidemic.
On Tuesday, official data showed 1,922 new cases of the disease, bringing the cumulative total to 115,056 cases with more than 5,300 COVID-19 deaths. The country surpassed 100,000 cases on July 27 amid the government's transition to the "new normal" phase of its disease management policy in reopening the economy.
The drop in Antam’s first-half revenue was led by poor sales of nickel ore, which plunged 94 percent yoy to Rp 89.3 billion following the government’s landmark ban on nickel ore exports in January.
Nickel ore had fallen in the first half from being the miner's third best-selling product in 2019 to become its fifth best-selling product because of the ban.
Antam said in a statement that it hoped to recoup its nickel ore sales margin in the domestic market, referring to the government’s plans to expand Indonesia’s downstream nickel industry and to regulate the domestic selling price of nickel ore.
“[The regulation] will create a competitive pricing structure for domestic minerals amid a positive outlook on domestic absorption, especially for nickel ore commodities,” said Antam corporate secretary Kunto Hendrapawoko.
In contrast, gold played a bigger role in Antam’s half-year sales revenue, its contribution increasing from 68 percent in 2019 to 69.4 percent this year.
Antam also reported that its half-year gold sales volume fell 50 percent yoy to 7,915 kilograms, but that gold sales revenue fell softer by 33 percent yoy to Rp 6.4 trillion, propped up by higher prices as consumers hoarded the precious metal as a safe haven asset amid a volatile market.
Gold prices hit $2,000 an ounce on Tuesday for the first time since the coronavirus outbreak weakened the economy and clouded the global financial outlook, reported AFP. Gold bullion prices had increased more than 30 percent this year.
“In 2020, Antam has been focusing on developing domestic customers in line with the public’s growing awareness of gold investment,” added Kunto.
Kunto previously told the Post on July 3 that the miner had allocated Rp 80 billion in capital expenditure this year to expand its dwindling bauxite, nickel and gold reserves, with a particular focus on the precious metal as the bestseller.
Meanwhile, first-half sale revenue of ferronickel fell 12.5 percent yoy to Rp 2 trillion, but the metal remains Antam’s second best-selling product, contributing 21.9 percent of total sales revenue.
Antam is continuing development on two metal smelters as part of its long-term plan. The smelters will enable the company to produce and export higher-value refined metals in line with the government’s vision to transform Indonesia into an industrial economy.
One of the smelters under development is a ferronickel smelter in East Halmahera, North Maluku, which was 98 percent complete as of June. The $289 million smelter will enable Antam to absorb more of its nickel ore and export higher-value ferronickel.
The other is an aluminum smelter in Mempawah, West Kalimantan. The $841 million smelter is being developed in cooperation with state-owned PT Indonesia Asahan Aluminium (Inalum), which specializes in aluminum smelting. Antam did not release the smelter's completion rate.
Antam shares, traded on the Indonesia Stock Exchange (IDX) using the code ANTM, soared 2.84 percent on Wednesday at 10:10 a.m. Jakarta time, even as the Jakarta Composite Index (JCI), the main gauge of the IDX, slipped 0.2 percent.
Antam shares have lost 14.29 percent of their value this year, compared to the JCI’s losses of 19.62 percent.