Aneka Tambang may build gas-fired nickel plant

Aneka Tambang may build gas-fired nickel plant

Bloomberg, Jakarta

PT Aneka Tambang, an Indonesian gold and nickel miner that is 65 percent owned by the government, may build a fourth nickel processing plant that uses natural gas instead of diesel to reduce fuel costs, president-director Dedi Aditya Sumanagara said in an interview.

"It's important that we build near an energy source and not use diesel, like perhaps building near gas plants in Sulawesi," an island in east Indonesia, he said on Tuesday.

Aneka Tambang has two nickel processing plants using marine diesel and industrial diesel, with a third plant to start next year, its 2004 earnings report said. Aneka Tambang's production costs rose 5 percent last year to Rp 1.52 trillion (US$161 million) with Rp 192 billion spent on fuel, it said in the earnings report released on Feb. 28.

"Producing ferronickel requires tremendous amounts of energy to generate the extremely high temperatures which are required to extract nickel," the report said. Fuel costs account for half of the cost of materials, or 13 percent of total cost of sales, it said.

Since March 1, the price of industrial diesel has risen 33 percent and marine diesel, by 39 percent, after the government cut fuel subsidies.

The proposed fourth processing plant will be for a venture with Posco, South Korea's largest steelmaker, for a ferronickel project in Halmahera, an island in eastern Indonesia near Sulawesi. They plan to produce 30,000 tons of nickel contained in ferronickel annually, both partners said.

Aneka Tambang will probably rely on its own funds for a majority stake in the project, Sumanagara said. The joint project itself may rely on project financing, once a financial study is done, he said.

The company ended 2004 with Rp 2 trillion in cash, 4 percent more than in 2003. The company's third processing plant will be ready in 2006.

In 2004, Aneka Tambang's profit more than tripled to Rp 826.4 billion, or Rp 433.2 a share, from Rp 226.6 billion, or Rp 118.8 as demand for precious metals rose.

Sales rose 29 percent to Rp 2.76 trillion.