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Antam to Benefit From Rebounding Nickel Prices
Yohanes Obor | April 25, 2010

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State-controlled miner PT Aneka Tambang should more than double its profit this year as a strong recovery in nickel prices and higher ferronickel sales will outweigh the expected lower returns from gold, analysts said.

Following the release of Antam’s first-quarter results on Thursday, PT Samuel Sekuritas Indonesia has predicted a Rp 1.22 trillion ($135.4 million) profit for the company in 2010, while PT NISP Sekuritas has forecast a 1.24 trillion net profit.

Both estimates are more than double Antam’s Rp 604 billion profit in 2009.

Antam posted a first quarter profit of Rp 201.9 billion, up 125 percent on the same period last year, although below market expectations, according to Samuel Sekuritas.

“We expect stronger quarters ahead on higher sales volume and continuing nickel price strength,” Christine Salim, head of research at Samuel Sekuritas, said in a report released on Friday.

Samuel Sekuritas predicted Antam would sell 16.2 tons of ferronickel in 2010, up from 14.2 tons last year.

The brokerage said it expected the average ferronickel price would increase from $6.60 an ounce in 2009 to $10 an ounce this year.

However, Christine said the strong rupiah could have a negative impact on Antam.

“While we expect strong growth in nickel sales, of 50 percent year-on-year, Antam will be disadvantaged by the appreciating rupiah because nickel sales are denominated in US dollars,” she said.

NISP Sekuritas analyst Bagus Hananto said Antam would have a much better 2010.

“Overall, we think that it is likely Antam’s 2010 performance will increase significantly due to higher nickel prices and the company’s higher ferronickel production capacity from the resumption of FeNI III [a nickel processing plant in Southeast Sulawesi].”

However, production problems are expected to limit Antam’s gold output this year.

Samuel Sekuritas expects Antam’s volume of gold sales to plummet to 3.1 tons in 2010 from 12.9 tones last year, despite stronger demand for gold, which will likely increase the average gold price to above $1,000 per ounce from $971 an ounce last year.

The fall in sales volume is due to production problems at Antam’s Pongkor gold mine in West Java, local media reported.