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ISSUER NEWS – JAKARTA, PT Harum Energy Tbk (HRUM) is getting more serious about developing its nickel business. On Friday (26/1), HRUM, through its subsidiary, PT Harum Nickel Industry (HNI), purchased shares owned by Prime Investment Capital Limited and Walsin Singapore Pte. Ltd. in PT Westrong Metal Industry (WMI).
In the share purchase transaction, Harum Nickel Industry bought as many as 1,214,000 shares, representing 60.7% of the issued and paid-up capital of Westrong Metal Industry.
The value of this share purchase transaction reached US$ 215.21 million. The funding source for this acquisition comes from a combination of internal cash and loans.
Thus, with the completion of the share purchase transaction, the share ownership of Harum Nickel Industry in Westrong Metal Industry increased from previously 20% to 80.7% of the issued and paid-up capital.
Harum Energy's CEO Ray Antonio Gunara stated, currently HRUM has no plans to acquire additional shares in the Westrong Metal Industry.
“Our priority is to ensure the smooth operation of Westrong Metal Industry's smelter, which is expected to start commercial operations in the first quarter of this year,” said Ray when contacted by Kontan.co.id, Tuesday (30/1). Currently, the Westrong Metal Industry project is in the final stages of construction.
Just so you know, Westrong Metal Industry is a limited company engaged in the processing and refining (smelting) of nickel. The company owns and operates a nickel smelter located in Indonesia's Weda Bay Industrial Park, North Maluku Province.
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Westrong Metal Industry's smelter consists of 4 lines of rotary kiln electric furnaces and infrastructure and converter facilities to produce high-grade nickel-matte products with an annual installed production capacity of up to about 56,000 tons of nickel contained in high-grade nickel-matte products.
Ray said this acquisition is part of HRUM's efforts to diversify its business through investments in the nickel sector.
In terms of product diversity, once Westrong Metal Industry starts commercial operations, HRUM will be able to produce high-grade nickel-matte products, which are expected to provide better-added value than the nickel products produced by HRUM's current smelter.
From a financial perspective, with the completion of the share purchase transaction of Westrong Metal Industry by Harum Nickel, as of January 26, 2024, Westrong Metal Industry's financial statements (including balance sheet and income statement) as a subsidiary will be consolidated into HRUM's consolidated financial statements as the parent company.
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Therefore, HRUM's future consolidated financial statements are expected to also reflect the financial performance contribution of the Westrong Metal Industry.
Although the price of nickel is currently correcting, HRUM sees the long-term prospects of the nickel business as still attractive. “And HRUM will continue to explore expansion opportunities in the nickel business following the Company's financial capabilities,” Ray continued.
In the coal business, HRUM targets coal production of 6 million tons, the same as the previous year. Ray sees the prospects for the coal business in 2024 as still quite good.
The price of coal is supported by the stable demand for this energy commodity, both from the domestic market and exports that require affordable energy sources.
