Release: Antam halts commissioning of FeNi II smelting plant following signs of damaged refractory bricks

Jakarta, March 28th, 2005 ? PT Antam Tbk announces today that management has decided to halt the commissioning of the FeNi II ferronickel smelter for safety reasons, as abnormal metal levels in the furnace and higher than normal temperatures at the bottom of the furnace indicated refractory loss and possible damage to bricks at the bottom of the electric furnace. Antam is making a detailed evaluation of the refractory loss, together with Hatch Ltd, which provided technical assistance for the commissioning of FeNi II. Antam will determine the impact to ferronickel production, unit costs and revenue, repair costs and the best repair solution. More information will be disclosed as soon as possible.

As previously announced, last month Antam completed the scheduled full overhaul of FeNi II and commenced the start up and commissioning of the smelter, with the technical assistance of Hatch Ltd. Hatch Ltd is supplying the technology for the new cooling system that was installed as part of a five month full overhaul, which is performed every eight to ten years. Pre-heating of the smelter began on February 15, 2005 and on February 22, 2005, the smelter was completely switched on. The power load was then gradually increased up to 20 megawatts (MW), which was achieved on March 16, 2005, and is below the full load target of 24MW needed to achieve the desired performance. On March 18, 2005, Antam achieved the first tap of nickel metal.

On March 21, 2005, a planned metal tap resulted in output of slag. Subsequent measurements revealed abnormal metal levels and higher than normal temperatures at the bottom of the furnace, which indicated refractory loss and possible damage to the bricks at the bottom of the electric furnace. Refractory bricks are used as protective lining in the steel shell of the furnace. On March 23, 2005, in line with suggestions from Hatch Ltd, Antam conducted a controlled shut down of the furnace, reducing the load of the furnace to 3MW. Antam cooled the furnace using fan blowers and began to make preparations for repairs, while waiting for an insurance assessment.

Antam?s preliminary analysis identified several possible causes of the refractory loss, although the precise cause is unknown. A joint analysis with Hatch Ltd will determine the precise cause and form the basis of a plan, including the time required and costs, to perform repairs. Antam will disclose this information as early as possible, including a revision of its 2005 ferronickel production target.

Antam?s President Director, D. Aditya Sumanagara said: ?Although at the moment we cannot accurately gauge to what extent we can mitigate the impact of lower ferronickel production volume and higher costs, we are currently evaluating several options including making an insurance claim, increasing the export of nickel ore, and toll smelting?

Antam?s FeNi II smelter is fully insured, including erection all risk, machinery breakdown and industrial all risks. Erection all risk insurance covers potential loss during the overhaul, including the commissioning period. (end of release)