Antam's ferronickel production to fall due to smelter shutdown

The Jakarta Post, Jakarta

State-owned mining company PT Aneka Tambang (Antam) expects its ferronickel production to fall 27 percent short of its initial target, following the unscheduled refurbishing of one of its two smelters, which is estimated to last for up to six months.

In a recent statement, the publicly listed miner said, due to the refurbishment, its full-year ferronickel production target from FeNi II smelter, located in Pomalaa, Southeast Sulawesi, had to be lowered to 6,800 tons from 10,000 tons.

To minimize losses, Antam will increase its volume of toll smelting with Pamco from 150 tons to 600 tons, meaning that the combined output of ferronickel from the two plants will reach 7,400 tons.

The company shut down the FeNi II smelter in late March after discovering damage to the refractory bricks at the bottom of the furnace due to excessive heat.

The current refurbishment is estimated to cost between US$3 million and $5 million, Antam said. The smelter is expected to begin commercial operations at the end of August.

In fact, a scheduled five-month-long overhaul had started at the FeNi II smelter last September. The overhaul included the full relining of the inside walls with new refractory bricks and a cooling system upgrade.

A preliminary analysis has suggested that the current damage was caused by poor implementation of a procedure in building up power in the facility.

"The initial analysis suggests the damage was not caused by faulty installation, equipment or technology," Antam said in the statement.

Antam is 65 percent owned by the government, with the remainder owned by the public.

It is now constructing its third smelter, which is expected to start production in 2006.

The company's net profit last year soared to Rp 826 billion (US$86.9 million), more than triple the Rp 227 billion profit recorded the previous year, due to strong prices on the global market.