Antam to raise gold output by 16 percent

JAKARTA. State-owned mining company PT Aneka Tambang (Antam) expects to raise the production output of its gold mining operations to 3,100 kilograms this year, or a 16 percent increase from 2,667 kilograms booked last year.

“For our gold commodity, our production target is 3,100 kilograms of which Pongkor mine would contribute 2,000 kilograms and Cibaliung mine would contribute 1,100 kilograms,” Antam corporate secretary Bimo Budi Satriyo told The Jakarta Post on Tuesday.

The Pongkor and Cibaliung mines produced 1,987 kilograms and 680 kilograms of gold respectively last year, he said.

Bimo said the company had targeted combined sales of 7,000 kilograms of gold this year, including those from third-party refining.

Despite a slight drop in gold production last year due to lower grade gold produced at the two mines, the company boosted sales by 22 percent to 8,009 kilograms.

The company booked a net sales of Rp 10.3 trillion (US$1.23 billion) in 2011, or 18.3 percent more than in 2010. The rise is also reflected in their profits, which rose by 14.5 percent to Rp 1.93 trillion from Rp 8.7 trillion.

The company attributed the rise to the healthy demand for ferronickel, nickel ore and gold.

Ferronickel production at their smelters rose by 5 percent to 19,690 Tni — 99 percent of which the company sold.

According to Bimo, 60 percent of ferronickel demand came from Europe, followed by South Korea with 39 percent. Meanwhile, 93 percent of demand for nickel ore came in almost equal amounts from China and Japan.

Antam president director Alwin Syah Lubis previously mentioned that the strong demand from Asian countries had helped mitigate the slowing demand from crisis-hit Europe.

This year, Antam targets a ferronickel production volume of 18,000 Tni, with a sales volume of 19,500 Tni.

The company also plans to run a ferronickel smelter modernization and optimization project this year by tapping into a Rp 3 trillion fund pooled from the sale of bonds in December 2011.

Reza Priambada, an analyst at PT Indosurya Asset Management, said that Antam should try reducing their operational costs, such as those connected to fuel, by forming cooperations.

“They could collaborate with PT Pertamina by signing a long-term contract for lower-cost fuel,” he told the Post.

He added that Antam must further diversify their client list to mitigate the negative effects of falling demand from their current customers.

“In Southeast Asia, countries such as Vietnam and Myanmar are building up their industries. There is growth there, so the chances for Antam are significant, especially compared to Singapore and Thailand, where the demand is high but the competition is stiff,” he said.

He further added that the issuance of bonds last year was “positive for growth”.

“The issuance of bonds is for the purpose of expanding their business and the market is eager to see the steps Antam would take in these expansions,” he said.

Antam closed Wednesday’s session at the stock exchange at Rp 1,820 after peaking at Rp 1,830. (Mariel Grazella/ The Jakarta Post)