Vale expects flat nickel output, price recovery

By Bernard Loebs

IDX-listed nickel miner PT Vale Indonesia Tbk expects nickel production this year to reach 79,691 tons, almost the same as last year?s target of 79,500 tons.

Speaking at a hearing with the House of Representatives Commission VII on energy and mining sector Wednesday, Vale Indonesia President Director Nico Kanter said that while the company?s 2013 performance was still being reviewed, two disturbances during the fourth quarter has caused the company to be unable to meet the full-year production target. He did not reveal what the problems were.

The lower production volume and a weak nickel price in the global market also means that the company would not be able to meet its 2013 net profit target of US$213.6 million, he said.

However, Nico expects financial performance to improve this year on the back of the expected recovery in the price of the commodity, which is projected to reach $16,000 per ton, compared to the average of $15,000 per in the third quarter.

With the expected price increase, Vale Indonesia expects to earn $1 billion in its total sales this year according to a document given to members of the House of Representatives during a hearing on Wednesday. For its net profit, the company expects to book roughly $112 million.

Nico said a positive trend was seen following the implementation of the export ban by Indonesia, however, the real impact would only be seen after China reduced its inventory, which had been increased before the ban began effective.

Elsewhere, Nico expressed optimism that the ongoing contract renegotiation with the government could be completed in the first quarter of 2014.

Editing by Reiner Simanjuntak