Antam may cancel plans to raise loans from Bank Mandiri

Publicly listed general mining company PT Aneka Tambang (Antam) is likely to cancel its plan to raise about US$150 million in loans from state owned Bank Mandiri to partly finance the construction of third ferronickel smelting plant (FeNi III), Bisnis Indonesia reported on Monday.

A source told the daily that Antam would likely finance the construction of the smelting plant solely from the proceeds of its bond issuance. The company might increase the value of its bond to about US$250 million from US$150 million initially planned by the mining company.

However, when asked for confirmation, Antam?s president director D. Aditya Sumanagara said the management had not yet made any decision related to the funding of the new smelting project.

The source also said that Antam was still involved in tough negotiations with PT Pembangkit Jawa Bali (PJB), a subsidiary of public utility PT PLN, on prices of power that would be purchased by the mining company to support the new plant?s operation.

Antam needs electricity supply of about 80 MW for the smelting plant and has offered a price of about US$0.07 per kWh. Initially Antam planned to build its own power plant for the new smelting plant but it later offered the construction of the power plant to PJB due to the lack of investment.

The high price of the power supply offered by PJB might cause Antam to choose to build its own power plant rather than buying from the power firm. (*)