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Jakarta Post

Golden opportunity: Antam eyes Papua mine amid dwindling reserves

  • Norman Harsono

    The Jakarta Post

Jakarta   /   Mon, October 26, 2020   /   07:17 pm
Golden opportunity: Antam eyes Papua mine amid dwindling reserves An employee shows two bars of gold produced by state-owned diversified mining company PT Aneka Tambang (Antam). ( Andrew Lotulung)

State-owned miner PT Aneka Tambang (Antam) has set its sights on acquiring the lucrative Wabu Block gold mine in Papua to replenish the company’s dwindling gold reserves.

Antam is already drafting a work plan for the gold-rich block in Intan Jaya regency, as the miner waits for its parent company, state-owned mining holding MIND ID, to hand over the block, according to the company.

MIND ID’s president director had previously confirmed the handover plan on Sept 29. The holding company estimates the block to contain 8.6 million ounces of gold resources.

“This will, of course, be a new hope for Antam,” Antam corporate secretary Kunto Hendrapawoko told The Jakarta Post on Friday

Antam’s takeover of the Wabu Block is expected to further consolidate the company’s gold business, which contributes over 60 percent of its annual revenue, thereby making gold Antam’s best-selling product. The miner also produces nickel, bauxite, silver and coal.

Antam’s revenue fell 36 percent yoy to Rp 9.2 trillion (US$627.6 million) in the January-June period, led by the plummeting sales of nickel ore, which used to be the company’s third best-selling product until Indonesia banned the export of such ores starting January this year.

Meanwhile, its net profits sank 80 percent yoy to Rp 84.8 billion in the same period.

Read also: Metal miner Antam sees net profit sink 80 percent in first half

“As the global economy improves and as demand for gold rises, particularly in the domestic market, Antam is optimistic about raising its gold margins in 2020,” wrote the mining company in a statement on Oct 21.

Gold is likely to see the highest price rise this year compared with other metals, an estimated 27.5 percent year-on-year (yoy) increase from 2019, as people turn to the precious metal as a safe haven asset during the pandemic, according to the World Bank’s latest commodity outlook report issued in October.

Gold prices have risen for the eighth consecutive quarter, gaining about 12 percent in the third quarter this year, after posting an all-time high of $2,067 an ounce on August 6, the report also stated.

Antam’s planned takeover of the Wabu Block can be seen as part of Indonesia’s growing nationalistic resource policy that has previously driven the government to acquire United States-headquartered gold miner PT Freeport Indonesia.

Freeport used to own the Wabu Block, which is located north of its famous Grasberg Mine, until 2015, when the US miner returned the block to Indonesia as a compromise to extend its mining permit for Grasberg, which is the world’s largest gold mine.

“Wabu has very big potential,” MIND ID senior vice president for exploration Wahyu Sunyoto told reporters at a virtual workshop on Thursday.

He said that the MIND ID’s estimate of Wabu’s gold resources was based on the assumption that companies extracted 2.16 grams of gold per ton of gold ore. There are some 117.26 million tons of gold ore in the Wabu Block, according to a 1999 survey.

However, until MIND ID handed over the Wabu Block, Antam would focus on “maximizing production” from its two existing gold mines in Pongkor, West Java, and in Cibaliung, Banten, added Kunto via text message.

Antam previously budgeted Rp 80 billion to find new gold, nickel and bauxite deposits in its existing sites, including the two gold mines. The budget represents a mere 5.3 percent of the company's total capital expenditure for this year at Rp 1.5 trillion.

The two mines’ output hit 430 kilograms in the third quarter, up 6 percent from the preceding quarter, adds the statement from Oct 21.

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

Antam shares, traded on the Indonesia Stock Exchange (IDX) using the code ANTM, dipped by 2.3 percent on Monday to Rp 1,060 apiece, as the benchmark Jakarta Composite Index (JCI) rose by 0.62 percent.