Vale needs US$2b to expand Sorowako smelter

By Hiski Darmayana

IDX-listed nickel mining giant PT Vale Indonesia Tbk will need about US$2 billion to finance the expansion of its smelter facility in Sorowako, South Sulawesi.

Company Chief Financial Officer, Febriany said that company plans to expand the production capacity of its smelter to 120,000 tons per year of nickel in matte from the current 75,000 tons. The project is currently at the final stage of feasibility study.

?We could not yet ascertain the funding sources for now. But clearly it would come from a combination of bank (loans) and internal funds,? Febriany told Petromindo.com Wednesday.

But outside funding issue, Febriany said that the success of the expansion plan of the Sorowako smelter would depend on the completion of the ongoing renegotiation of the company?s contract of work with the government.

?If we don?t get guarantee from the government regarding the completion of this (contract) renegotiation, we can?s (give) full commitment in carrying out the expansion project,? she said.

The ongoing renegotiation process with the government focuses on six points including share divestment obligation, concession size, royalty, extension of contract, domestic processing obligation, and the use of domestic goods and services in mining operations.

Editing Reiner Simanjuntak