Antam gets fresh loans from BCA for expansion

Rendi Witular, The Jakarta Post, Jakarta

State-owned mining company PT Aneka Tambang (Antam) announced on Wednesday that it had received US$60 million in loans from Bank Central Asia (BCA), the country's third largest bank, to fund the company's ferronickel expansion project.

Antam said in a press statement that the loans carried an interest rate of between 7 percent and 7.5 percent, with a maturity period of seven years and a 28-months grace period.

The company recently issued a seven-year note worth $200 million, also to raise funds for the ferronickel project. The notes carry a 7.37 percent coupon rate, with a yield to maturity of 7.87 percent.

Antam, which is listed in Jakarta and Sydney, is currently in the process of expanding its ferronickel factory under a project known as FeNi III.

With the expansion Antam expects to double its production of ferronickel to 26,000 tons per year from the current 11,000 tons. The project is also aimed at maintaining the company's competitive advantage as the world's lowest-cost nickel producer.

The project, which is scheduled for completion in 2006, is projected to cost Antam between $320 million and $330 million.

Besides nickel, Antam also mines gold, bauxite, iron sand and silver. Its exploration area covers a total of 2.7 million hectares.

The government owns a 65 percent stake in the company, while the remaining 35 percent shares are owned by the investing public.

Meanwhile, BCA said in a press statement that its loan agreement with Antam reflected the growing confidence of banks in the corporate sector.

"The loan facility to Antam has shown that BCA is getting more active in pursuing its role as a financial intermediary," BCA said.

Banks have for long been reluctant to channel loans to the country's corporate sector as they consider the business environment as not yet being conducive for companies to develop their businesses and repay their loans.

The corrupt judicial system and the weakness of the existing bankruptcy law in protecting creditors are also factors preventing the banks from channeling loans.