Central Omega seeks partner for smelter

JAKARTA. In anticipation of the ban on raw material exports, set to go into effect in 2014, nickel miner PT Central Omega Resources is planning to build a smelter, which will process nickel ore into ferronickel, near its mining sites in Morowali, Central Sulawesi.

Central Omega president director Kiki Hamidjaja said that the company was looking for a strategic partner to establish the smelter.

“We are in talks of three candidates; two are from China and another from Taiwan. We hope to have chosen a partner in June,” Kiki said during a press conference in Jakarta on Thursday.

He said that the total investment in the project reached had US$500 million. Central Omega will use Rp 500 billion ($56 million), or 50 percent of Rp 1 trillion raised from a recent rights issue, as initial investment for the ferronickel project.

“The remaining funds will be supported by the chosen strategic partner and loan from a Chinese bank,” Kiki said.

He added the ferronickel smelter, with a production capacity of 100,000 tons per year, would need about two years to be completed.

“We still have enough time before the government fully implements ban on ore export in 2014,” he said.

The government is planning to implement a law to ban exports of raw materials as part of its efforts to encourage the growth of downstream industries.

Kiki said that Central Omega, which had previously operated in the finance industry before switching its core business to trade and mining in 2008, exported most of its nickel products to China.

“When we have the smelter, we will be able to diversify our market, by selling our ferronickel to Korea, Japan, India and Taiwan,” he said, adding that main consumer of ferronickel was the stainless steel industry, which had yet to grow in Indonesia.

Central Omega sold 1.3 million metric tons of nickel in 2011, earning Rp 485 billion in revenue. The company’s net profit stood at Rp 185 billion in 2011, after suffering a year of zero revenues or profits as an
inactive business in 2010.

Central Omega is targeting to book Rp 1.2 trillion from the sales of 3.6 million metric tons of nickel this year and Rp 2.1 trillion from selling 6 million metric tons in 2013. The company is expecting to see its net profits hold steady at Rp 185 billion this year and rocket to Rp 792 billion in 2013.

“We have the courage to set higher targets as we will see production grow to two mining sites this year and three mining sites in 2013. We only had one mining site in 2011,” Kiki said.

Central Omega’s mining sites are located in North Konawe, Southeast Sulawesi, with a production capacity of 200,000 metric tons of nickel per month and in Morowali, capable of producing an additional 100,000 metric tons of nickel per month. (The Jakarta Post)