New Smelter to boost revenue at Antam in near future

State mining company Aneka Tambang, commonly known as Antam, says it expects to gain an additional $150 million in revenue from its alumina smelter plant slated to open later this month in Tayan, West Kalimantan, the company’s chief said on Thursday.

Antam’s smelter will be able to process up to 300,000 metric tons of chemical-grade alumina each year from bauxite, president director Tato Miraza said.

Construction of the $490 million smelter began in June 2011. Tato said the company planned to operate the smelter at 70 percent capacity.

Tato said its new smelter in Tayan would generate revenue that would offset up to $300 million in potential losses that the company could incur after a ban on unprocessed mineral exports takes effect at the start of 2014.

The long-discussed policy is intended to encourage investment that builds Indonesia’s ability to add value in the commodification and export of the nation’s natural mineral resources.

The Tayan smelter will be controlled by Indonesia Chemical Alumina, a joint venture between Antam and Japanese chemical engineering firm Showa Denko.

Antam owns an 80 percent stake in the venture; Showa Denko controls the remaining 20 percent.

The smelter’s construction was financed by funds from the shareholders and loans from the Japan Bank for International Cooperation and a consortium of other Japanese banks.

Tato said Antam planned to make up for revenue lost to the export ban by boosting sales of gold and sponge iron from a factory that it co-owns with state-controlled Krakatau Steel.

The Antam chief added that he expected the upcoming export ban to trigger a price increase in mining commodities.

“Indonesia supplies about 35 percent of the world’s nickel. Around 30 percent of the supply is in raw form. If this 30 percent of raw materials is taken away from the world market, it will trigger a shortage and price increase,” he said.

Antam exported 6.1 million tons of nickel ore in the first half of this year, up 50 percent from the same period last year.

Earlier this week, Industry Minister M.S. Hidayat announced that China’s Shandong Nanshan Aluminum also planned to build a bauxite smelter in the country.

The minister said on Wednesday that the company had allocated at least $5 billion for the joint venture with Indonesia’s Mitra Karsa Utama, which will have a 5 percent stake. The smelter is expected to be completed in three years’ time.