Antam awaits approval on key project

The Jakarta Post, Jakarta

State-owned mining company PT Aneka Tambang (Antam) hopes the government to approve its rights issue plan in a bid to raise cash to help finance a bauxite mining project in Tayan, West Kalimantan.

The estimated US$220 million project is intended to add the value to the company's bauxite resources at the site. Currently, Antam exports bauxite largely to Japan and China.

"To conduct a rights issue, we have to get the government's approval as the controlling shareholder," Antam secretary Dohar Siregar said on Friday.

Deputy of the Office of the State Minister of State Enterprises Aloysius Ro confirmed that Antam, a publicly-listed company, has proposed to the government to issue new shares to raise funds.

With the project, Antam plans to produce chemical grade alumina, which is used for various commercial and industrial purposes including the manufacturing of ceramics, paint, spark plugs, and toothpaste.

Dohar said that aside from the rights issue mechanism, Antam was also preparing other financing alternatives, and is working with international partners to determine the optimal financing scheme for the project.

"The company expects to come to a final decision on the financing scheme by the end of the first quarter of this year at the latest," Dohar said.

The government still holds a 65 percent stake in the company, while public investors own the remainder.

Last year, Antam enjoyed a 19 percent increase in sales on the back of both rising sale volume and higher ferronickel and nickel prices.

Sales surged to Rp 2.04 trillion (US$242 million) in 2003 from Rp 1.71 trillion in 2002, with 85 percent of the revenues obtained from exports.

The company is also in the middle of constructing its third smelter at its nickel mine in Pomalaa, South Sulawesi, to increase production to 15,000 tons from 11,000 tons per year. The new smelter is expected to commence operation in early 2006.