Antam to use $1.7 billion for smelter-grade alumina facility in Mempawah

State-owned mining company PT Aneka Tambang (Antam) is planning to use around Rp 7 trillion (US$551 million) allotted by the government, which will act as a standby buyer for Antam’s planned rights issue, to finance its business projects.

Antam president director Tato Miraza said that his firm would use the funds to finance the construction of a ferronickel smelter in East Halmahera (North Maluku), a smelter-grade alumina facility in Mempawah (West Kalimantan) and an anode slime project.

The projects required around $1.6 billion, $1.7 billion and $100 million, respectively, he said.

“We plan to carry out the rights issue sometime this year, from which we will get at least Rp 7 trillion from the government,” he went on, adding that his firm would possibly get more funds from other potential buyers.

State-Owned Enterprises (SOEs) Minister Rini Soemarno confirmed on Thursday that the government planned to allocate Rp 7 trillion to buy Antam’s new shares, which would be released through a rights issue.

The government currently owns a 65-percent stake in Antam.

“The government will allocate a sum of funds, particularly for state enterprises operating in mining and infrastructure. Antam is one of the enterprises that needs big investment for smelters to provide added value [for products],” Rini added.

The firm plans to build a joint venture for its Mempawah project, which is expected to have production capacity of 1.2 million tons of alumina. The $1.7 billion-project is targeted to kick off this year.

The firm, which has diversified outputs covering nickel, gold, bauxite and coal, saw its sales slump by 34 percent to Rp 5.81 trillion in the first nine months of last year from Rp 8.8 trillion in the same period in 2013.

Antam’s corporate secretary Tri Hartono previously said the decrease in sales was partly due to an unfavorable commodity market.