Jakarta, June 2, 2014 - PT ANTAM (Persero) Tbk (ASX - ATM; IDX – ANTM; ANTAM) is pleased to announce the company has recorded positive operational performance in the first quarter of 2014 with a 46% increase of ferronickel sales over the same period of 2013. ANTAM's bauxite production in the first quarter of 2014 jumped 186% over the same period of 2013 in line with the preparation of the commercial operations of ANTAM's Chemical Grade Alumina (CGA) plant. ANTAM's diversification strategy was evidenced from the contribution of gold to the company's first quarter of 2014 sales which amounted to 50% or equal to Rp1.16 trillion. ANTAM's net sales in the first quarter of 2014 decreased 31% over the same period of 2013 to Rp2.30 trillion mostly due as a consequence of the government's policy to ban ore export coupled with continued low average selling prices. As a result, ANTAM posted a loss for the first quarter of 2014 to a negative position of Rp272.6 billion.
ANTAM's President Director, Tato Miraza said:
"The first quarter of 2014 period was very challenging for us given the implementation of the ore export ban policy coupled with continued low average selling prices. Nonetheless, the ore ban policy has boosted commodity price level and significantly tilted the balance of global commodity supply and demand, notably nickel, beginning in the second quarter of 2014. As a result, we are confident the company's 2014 annual financial performance to remain positive despite lackluster performance in the first quarter of 2014.
Since the beginning of the second quarter of 2014, nickel prices have bounced back to levels unseen for the last 18 months. London Metal Exchange (LME) spot prices have averaged US$8.00 per lb. for the month of April and show further signs of improvement for the rest of 2014 for a number of reasons.
First and foremost, Indonesia once supplied the Republic of China with nearly 60% of their nickel ore requirements where inventory levels are expected to decline rapidly over the coming months as China continues to deplete these reserves, whilst struggling to find suitable substitutes. Secondly, Japan used to source high grade nickel ore from Indonesia, and currently is also striving to secure suitable substitutes to feed their stainless steel industry. These two major factors are partly fueling the recent hikes in commodity prices, and we feel that this trend will continue going forward."
In the first quarter of 2014, ANTAM's development initiatives showed positive progress. ANTAM also remained prudent in its development projects. The commissioning of the Tayan CGA plant remained on track whilst EPC progress of the Pomalaa Ferronickel Plant Expansion Project also in line with progress and reached 40% as at March 31, 2014. In the first quarter of 2014, ANTAM also signed a Memorandum of Understanding (MoU) with PT Freeport Indonesia to evaluate the feasibility study to develop copper smelting facilities.
As a result of the company's continued efficiency efforts, ANTAM saved Rp5.7 billion in the first quarter of 2014. The savings in the first quarter of 2014 came from efficiencies in materials usage at ANTAM's business units as well as negotiations with third party suppliers.
In the first quarter of 2014, ANTAM's capital expenditure reached Rp380.3 billion or 13% of the company's 2014 capex budget of Rp 2.878 trillion. The largest spending of ANTAM's capex in the first quarter of 2014 was for development purposes which amounted to Rp 277.7 billion. As ANTAM's balance sheet is currently being limited in terms of adding any unnecessary financial debt and further capital expenditure, ANTAM is evaluating its capital expenditure plans so that it is able to apply as little additional debt whilst still targeting to complete these projects which will result in value added capacity coming on stream as soon as possible. A number of potential joint venture partners are currently in discussion with ANTAM to secure a position in the downstream value added lines of business without overly burden the company with debt.
