Antam confirms financing for ferronickel expansion project
Friday, August 2 2002 - 12:36 AM WIB
State miner PT. Aneka Tambang Tbk announced on Thursday that it had decided to stick to original plan to finance the ferronickel expansion project known as FeNi III with the fund from consortium of OECD banks led by, IKB Deutsche Industriebank (IKB) while German Export Credit Agency (ECA), Hermes Kreditversicherungs-AG (Hermes) to issue export credit to insure the funding. RWE Solutions (RWE) of Germany will carry out smelter construction.
The decision came amid media reports that Antam might not use IKB syndicate financing because it would be more expensive compared to issuing US dollar and Rupiah denominated bonds.
?The FeNi III nickel expansion is a solid project and a key part of Antam?s strategy to remain amongst the lowest cost producers of nickel in the world and enhance shareholder value. Therefore we must be prudent to ensure that the project will meet Antam?s requirements. I believe the acceptance by an ECA confirms to the financial community that Antam is a world-class mining company. The RWE/Hermes scheme is the best choice for Antam,? President Dedi Aditya Sumanagara said.
In June, Antam announced the in principle acceptance for export credit from Hermes for funding for the FeNi III project from the IKB consortium. The procedure to apply for ECA-covered financing is based on the guidelines set by the OECD, and is a thorough and lengthy process. The structure of the financing will include a Hermes-covered structured loan of approximately USD 255 million from the IKB syndicate, a loan of USD75 million from Bank Mandiri and approximately USD50 million from Antam?s equity.
The total estimated project costs (including cost of financing) are not to exceed USD380 million. The project includes a third ferronickel smelting plant, which has a capacity of 15,000 tonnes/year and uses Hatch copper cooler technology. An associated 82.5MW diesel power unit will be constructed and diesel power unit No.2 will be renovated so it also may be fueled by the less expensive low sulfur waxy residue.
The next step is financial closure, which will be obtained after Antam and the IKB syndicate of banks, as well as Bank Mandiri, complete the associated legal documentation, which includes executing loan and auxiliary agreements. Financial closure also requires certain conditions precedent be met, and is anticipated in the first quarter of 2003. After 31 months of construction, commercial operation is anticipated by the end of 2005.
RWE was appointed in November 2000 as the nominated Engineering Procurement and Construction (EPC) contractor to build Antam?s third ferronickel smelter. Likewise for the associated diesel power plant, MAN B&W Diesel AG, also of Germany, will carry out the related EPC contract.
The FeNi III project which is located in Pomalaa, South East Sulawesi involves the construction of a third smelter to more than double Antam's ferronickel capacity to 26,000 tons per year. (alex)