Antam Sees Delay to Some Japan Nickel

Indonesian state miner Aneka Tambang Tbk (ANTM.JK) may delay nickel ore shipments to a Japanese buyer after the earthquake, but long-term demand is expected to be strong as Japan recovers, the firm's chief said on Thursday.

"Some five to six cargoes of nickel ore may be delayed in the next few months because one of our buyers has been affected by the earthquake," Alwin Syah Loebis told Reuters in an interview at the Reuters Global Mining and Steel Summit.

Cargoes that may be affected are shipments to Pacific Metals Co. Ltd (5541.T), while shipments to Antam's two remaining buyers Sumitomo Metal Mining Co. Ltd (5713.T) and Nippon Yakin Kogyo Ltd (5480.T) were unaffected, he said.

The firm expects to ship 2.4 million tonnes of nickel ore to Japan this year, up from 2.2 million tonnes last year. Japan accounts for about 41 percent of Antam's planned nickel ore sales for this year at 5.86 million tonnes

"But this is only temporary. Once Japan recovers, demand will pick up and help nickel prices to remain firm," he said.

The price for nickel, used for manufacturing stainless steel in industry and home products such as kitchen sinks and pans, stood at $27,210 a tonne on Thursday, up over 8 percent this year, having touched a 34-month-high last month on strength in other metals and rising steel output.

The firm expects to produce 18,000 tonnes of ferro nickel this year, down 4 percent from 2010, as it will have a maintenance shutdown for its second smelter in November-December, said Loebis.

Despite expected lower output, Antam expects to sell 18,500 tonnes of ferro nickel this year, up 1.4 percent 2010 as the firm will use inventories to boost sales.

GOING IT ALONE

Loebis said Antam has decided not to seek a new partner to develop a nickel project on Halmahera island in eastern Indonesia after BHP Billiton (BHP.AX) pulled out from the project in 2008. Foreign miners have struggled to invest in Indonesia because of policy flip-flops, corruption and red tape.

"We want to speed up the project. If we keep looking for new partners, the project won't be completed," he said, adding that it expects to close financing for the $1.6 billion project this year.

The project will be Antam's fourth smelter, and will have a capacity to produce 27,000 tonnes of ferro nickel a year. Construction is expected to start in November and Loebis hopes it will start operating in 2014.

The firm expects to finalize financing by October, and is considering issuing bonds or obtaining a bank loan, and has appointed local brokerage Danereksa as an adviser.

It has signed a 30-year electricity supply agreement with state electricity firm Perusahaan Listrik Negara. PLN plans to finance, build and operate a 260-megawatt power plant to will electricity for the nickel project.

Antam also plans to more than double coal production to 500,000 tonnes this year at its Sarolangun mine in eastern Sumatra island, which its unit PT Indonesia Coal Resources bought last year, said Loebis.

"We will use the coal for our coal-fired power plant in Sulawesi island. But we may also sell the coal to other buyers," he said.
(Editing by Neil Chatterjee)

source: http://www.reuters.com/article/2011/03/24/us-mining-summit-antam-idUSTRE72N29620110324