Antam set to build $450m alumina project early next year

The Jakarta Post, Jakarta | Wed, 09/01/2010 9:25 AM

State mining company Aneka Tambang (Antam) will launch its US$450 million chemical grade alumina (CGA) project in Tayan, West Kalimantan early next year, the company said Tuesday.

“We expect the construction to be completed by December 2013 and commercial production to start in the first quarter of 2014,” Antam corporate secretary Bimo Budi Satriyo said in a statement.

Bimo said that CGA plant would be built and operated by Antam in cooperation with Showa Denko of Japan.

Indonesia Chemical Alumina (ICA), the two companies’ joint venture to run the project, has named a consortium comprised of Wijaya Karya, Tsukishima Kikai and Nusantara Energi Abadi to build the plant. The engineering, procurement and construction (EPC) contract for the construction of the CGA plant was signed on Tuesday.

“The Tayan CGA project will add value to Antam’s vast bauxite reserves,” Bimo said, adding that the project will produce 300,000 tons of CGA per year.

Showa Denko will use 200,000 tons, or 66.67 percent of the Tayan plant’s total alumina production, to substitute for the current alumina output from its Yokohama plant. The remaining 100,000 tons will be sold on the Indonesian domestic market.

CGA products are used to produce functional and electronic materials. Alumina is a processed material which uses bauxite as a raw material. It can be made into many products, such as aluminium and toothpaste. Aluminium hydroxide, an intermediate product in alumina production, is used as coagulant for water purification.

The joint company will transfer Antam’s bauxite production to the Tayan CGA factory, which will be built on a 36,410 hectare plot in Tayan, West Kalimantan.

Earlier this month, Antam spent $525,000 to buy a 15 percent share of ICA to maintain a controlling 80 percent stake in the joint company, which was established in 2007. Showa Denko currently owns a 20 percent stake in ICA.

Analysts previously said the increased stake in ICA and realization of the Tayan CGA project would increase Antam’s revenue in the future, as it will no longer rely on its gold production to boost revenues.

In its first half financial report issued on Tuesday, Antam reported it booked Rp 4.31 trillion in revenue, down 2.05 percent from the same period last year at Rp 4.4 trillion.

Antam’s first half net profits increased more than three fold to Rp 756.3 billion — up from Rp 223.77 billion in the same period last year — ballooning operating profits as sales charges decreased. Operating profits for the state-owned company increased 447.79 percent to Rp 1.09 trillion from Rp 198.98 billion in the same period. (est)