Vale increases use of coal as source of fuel to reduce cost

By Brigida Ernestina Elu Wea

As part of cost-saving efforts to help cope with the current weak commodity price environment, IDX-listed integrated nickel mining company PT Vale Indonesia Tbk has in recent years started switching to cheaper fuel by using coal, instead of high sulfur fuel oil (HSFO), in certain machinery.

Febriany Eddy, Chief Financial Officer of the company, said on Friday that at its reduction furnace, the company has already started using coal since 2013, and now the fuel conversion program has reached 90 percent.

She said that the company will expand the use of coal at drying furnace going forward, while in the melting furnace, source of electricity has now come from hydro power plant (PLTA).

?The cost of energy is quite huge for us, and is mostly related to activities at plants not at the mines. With the fuel conversion into coal and PLTA, the contribution of the cost of energy has now declined to 30 percent (of total costs) from the past where the contribution is much higher than this level. We?ll response to the (commodity) price pressure by increasing efficiency,? Febriany explained.

Meanwhile, Kontan quoted PT Vale President Director Nico Kanter as saying that the company will apply technology at its furnaces to allow flexibility in the use of different types of fuel, depending on price and needs.

He acknowledged that the use of coal as source of fuel in the company in the first quarter of this year increased by 9 percent.

Editing by Reiner Simanjuntak