Vale Indonesia to up output to 80,000 tons
Wednesday, March 11 2015 - 02:20 AM WIB
After achieving a record-high production in 2014, IDX-listed integrated nickel mining company PT Vale Indonesia Tbk plans to slightly increase production this year to around 80,000 tons nickel in matte primarily through implementation of new mining strategy.
?With this production target, we plan to increase nickel in matte deliveries over 2014,? the company said in an annual report published on Monday.
The company last year produced 78,726 tons of nickel in matte, and recorded revenue of US$1.04 billion.
?With the continuing increase in our nickel in matte production volume, we expect our revenue to increase in 2015 compared to 2014. We believe that the higher production level, together with expectation on improved nickel price and lower cost of production through continuous improvement in maintaining our cost efficiency, will enable us to reach a higher net profit target in 2015 than 2014,? PT Vale said.
Elsewhere, PT Vale said that the conclusion of the amendment of its mining contract of work in October of last year, established strong ground for the company to continue with its growth plan. ?We are targeting a significantly higher capital expenditure in 2015 of US$120 million to US$185 million. This shows our strong commitment to continue to expand in the future to bring a better return to our shareholders,? it said.
The company expects nickel price to remain strong this year. It added that most analysts agree that 2015 nickel prices will increase compared to 2014, due to lower global production. This is mostly caused by the lack of nickel ore exports from Indonesia, which stopped in early 2014. Ore inventories in China have continued to fall during 2014, which should lead to a shortage in 2015.
Falling commodity prices, including oil, could provide a potential cost saving for PT Vale during 2015. The company said that other cost reduction initiatives will continue in 2015, following a very successful year of implementation in 2014. However, in 2015 the company will have to contend with the impact of a full year?s implementation of the new royalty rate as well as higher costs due to the new mining strategy.
PT Vale said it will seek approval for some growth investments in 2015. These investments are subject to various government approvals and permits as well as shareholder approvals. The first investment is likely to be an expansion of nickel matte production facilities in Sorowako, it added.
Editing by Reiner Simanjuntak