Eramet delays Weda Bay nickel project
Saturday, February 22 2014 - 03:47 AM WIB
French mining giant Eramet said that it has decided to delay the planned multi-billion dollar Weda Bay nickel mining and smelter project in Halmahera, North Maluku, due to the lingering weak nickel prices.
Eramet Group Chairman and CEO Patric Buffet said in a statement obtained Saturday that discussions were also still on going with the Indonesian government to clarify certain regulatory points and tax framework to be applied in the project.
?Given the deterioration observed on the nickel market in 2013 and the short-term outlook for nickel prices, Eramet, in agreement with its partners Mitsubishi Corp. and (Indonesian-listed) PT Antam, considered that the conditions that would allow them to consider an investment decision on the Weda Bay project in 2014 were not met,? Buffet said.
He pointed out that the low levels of nickel prices would not enable the project to be financed on satisfactory terms.
?This postponement of the project led the Eramet group to record, as of December 31st, 2013, a 224 M? (US$307 million) write-down (Eramet?s share) on its fixed assets with respect to the Weda Bay project,? he said.
Minister of Energy and Mineral Resources Jero Wacik said in August of last year that Eramet and its partners plant to invest up to US$5.5 billion in the Weda Bay project, which aims at mining one of the world?s largest nickel deposits and process them into value added products at local smelter.
Elsewhere, Buffet welcomes the January 12 export ban of mineral ores including nickel by Indonesia, the world?s largest exporter of nickel, saying it would eventually help support price of the commodity in the international market.
?We remain confident in the nickel market?s outlook. In that respect, the implementation in January 2014 of the ban on non-processed ore exports from Indonesia is a positive step towards restoring market balance,? he said.
Benchmark prices of nickel, mainly used in stainless steel, languished at four-year lows for much of 2013 due to global oversupply, leaving many producers operating at a loss.
Editing by Reiner Simanjuntak