Six Export Credit Agencies Offer Smelter Funding
Six export credit agencies from Europe and Asia have expressed interest in providing $520 million to $790 million in financing to Indonesian state-controlled miner Aneka Tambang (Antam) to build its ferronickel smelter plant in Halmahera, on the island of Maluku.
“We have visited four European countries — Finland, Denmark, Germany and Austria; and two Asian countries — Japan and South Korea. Six export credit agencies have expressed their interest,” said Antam’s finance director Djaja M. Tambunan in Jakarta on Tuesday.
Djaja, an executive director at JP Morgan Chase from 2006-08, said Antam is still tendering the construction work for the smelter, which will require a total investment of up to $1.5 billion. “We actually have secured a loan commitment of up to $900 million from a consortium of creditors led by Bank Mandiri.”
The consortium consists of Mandiri Sekuritas, Goldman Sachs, Deutsche Bank, Sumitomo Mitsui Banking Corp., Bank Rakyat Indonesia and Standard Chartered Bank.
Antam is pursuing funding from credit agencies in an effort to secure lower financing costs, Djaja said.
The commitment from the consortium, he added, will be used as a backup plan to be put in effect should the economic crisis in Europe worsen and affect the export credit agency’s financing capability.
Antam plans to finance the smelter with its own cash in addition to external funding. Sixty-five percent of financing is expected to come from external funding, and 35 percent from Antam.
Construction of the ferronickel smelter is scheduled to be completed in 2014. The smelter will have a production capacity of 27,000 tons per annum of nickel contained in ferronickel, a processed commodity key to the production of stainless steel.
The company’s executives have listed three global steel giants as potential buyers: South Korea’s Posco, Japan’s Nisshin Steel and India’s ArcelorMittal.
Antam posted a 7 percent year-on-year decline to Rp 4.5 trillion ($477 million) in its first-half unaudited sales, as the global crisis has caused the company’s ferronickel sales to fall.
The company suffered from dropping nickel prices in the international market, it said in a filing on July 31 to the Australia Stock Exchange, where its shares are also listed.
Antam’s main share listing is at the Indonesia Stock Exchange (IDX).
Antam booked a 41 percent decline to Rp 1.2 trillion in ferronickel sales, as the average ferronickel price in the first half decreased by 24 percent to $8.53 per pound (453 grams).
The Jakarta-based company said that “key projects are on track.”
Antam’s shares fell by 0.79 percent to Rp 1,250 on Wednesday’s closing at the Indonesia Stock Exchange.