Shares in gold and nickel miner Aneka Tambang rose on Wednesday after the company said it had started the construction of its $1.6 billion ferronickel smelter plant in North Maluku.
Coordinating Minister for the Economy Hatta Rajasa and Antam president director Alwinsyah Lubis attended the ground-breaking ceremony of the plant in Buli, East Halmahera, on Wednesday, the company said in a statement.
Lubis has said that the company’s $1.6 billion ferronickel smelter would be its largest project in eastern Indonesia.
Antam’s smelter project is part of its expansion efforts to comply with a new regulation requiring miners by 2014 to increase the value of their products before being exported.
Antam rose 2 percent to Rp 1,640 in Wednesday trading. The shares have fallen 33 percent this year, while the exchange’s benchmark index has risen 0.3 percent.
Antam will build the ferronickel plant at a cost of $1.6 billion.
Once it begins operations at the end of 2014, the plant would produce 27,000 tons of nickel annually. The plant will be operated by Antam’s unit FeNi Haltim, Lubis said.
The project in Buli includes a $600 million, 275-megawatt power plant that will be built and operated by state utility company Perusahaan Listrik Negara.
PLN will then provide power for FeNi Haltim for 30 years. “PLN plans to build, finance and operate the power plant,’’ Antam said.
Banks — including Bank Mandiri, Bank Rakyat Indonesia, Mandiri Sekuritas, Goldman Sachs, Deutsche Bank, Sumitomo Mitsui Banking Corporation and Standard Chartered Bank — have pledged their commitment to help Antam finance the construction of the smelter, with loans of up to $1 billion, Antam said.
The law requiring companies to add value to natural resources before export has attracted both praise and criticism. While some companies are using the law to fuel development, others say it will be too costly and the rules commence too soon.