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PT Aneka Tambang TBK (PT Antam TBK.).

Backgrounds

PT Antam Tbk. Was established in Jakarta through a merger of a number of mining companies in 1968 with an authorized capital of Rp 3,800 billion including issued capital of Rp 953.8 billion fully paid. Antam is 65% owned by the state and 35% by the public.

PT. Antam operates integrated mining industry as a miner and as producer of processed minerals. The company, which is based in Jakarta, operates various mines including gold, nickel, bauxite, silver and iron sand mines. It also has processing factories like ferronickel plants in Sulawesi.

The company has succeeded in establishing strong market footholds in Europe, Australia and Asia. It has joint venture business with foreign partners in the country.

PT Antam is public company listed on the Jakarta Stock Exchange and Surabaya Stock Exchange selling 35% of its shares to the public in 1997. In 1999, PT Antam was listed on the Australian Stock Exchange. In 2003, PT Antam issued its first dollar bond through its subsidiary in Mauritania Antam Finance Ltd. The bond was listed on the Singapore Stock Exchange.

In 2010, PT Antam Tbk set aside IS$ 280 million for capital expenditure, including US$ 30 million for the acquisition of gold or coal mine, US$ 70 million for routine expenditure and US$ 40 million for the development of the Cibaliung gold mine in Banten.

Currently PT Antam has joint venture companies operating in nickel, gold, bauxite, coal mining, etc. Among its subsidiaries is PT Weda Bay Nickel, PT Cibaliung Source Daya, PT Indonesia Coal Resources, PT Nusa Halmahera Minerals, PT Borneo Edo International, etc.

Reserves declining

The exploration division of PT Antam focuses more on efforts to find new nickel, gold and bauxite reserves in Indonesia to offset a decline in its reserves. Its mineral reserves have been on the decline since 2009 after years of intensive exploitations.

The total reserves and mineral resources owned by PT. Antam Tbk are as follows:

Nickel

Antam has three ferronickel factories--FeNi I, FeNi II and FeNi III--in Pomalaa, Southeast Sulawesi with a total installed capacity of 26,000 tons of ferronickel a year. Antam operates diesel power generating plants (PLTD) with a capacity of 102 MW to supply its facilities with electricity. The power plant was built and operated by Wartsila Finlandia.

In mid 2010, PT Antam started the operation of a new nickel mine in the area of Tapunopaka, Southeast Sulawesi, marked with the first export of 50,000 wmt of nickel ores. Antam already has nickel mines in operation in Pomalaa, Gee and Buli and the three ferronickel plants in Pomalaa, Southeast Sulawesi.

The Tapunopaka mining concession totals 6,213 hectares producing 7.1 million wmt of nickel ores with a high grade of 2.3% and 43.7 million wmt of nickel ores with low grade of 1.6%. Part of the production is exported and the rest is fed to Pomalaa ferronickel plants. The Tapunopaka mine will guarantee supply of nickel ores for the ferronickel plants with the Pomalaa reserves are shrinking almost to depletion.

Antam and PLN will build a new power plant with a capacity of 260 megawatts needed by the ferronickel plants under a 30 year cooperation agreement.

With additional capacity of 27,000 tons a year, Antam's production of ferronickel will double by 2014. Currently, the production of nickel in Pomalaa, Southeast Sulawesi, averaged 26,000 tons per year.

The construction of a ferronickel plant in Halmahera could improve the operational efficiency of Antam as the nickel ores produced in that island could be processed in that area without having to send them to Pomalaa.

PT Weda Bay Nickel (PT WBN) is a joint venture company between PT Antam (20%) and France's Eramet SA (56.6%) and Mitsubishi (33.4%). PT WBN will operate a nickel mine with a production capacity of 65,000 tons per year. The nickel reserves of the company are estimated to reach 600 million tons. Development of the nickel mine is estimated to cost US$ 2.5 billion.

PT. Antam plans to build a ferronickel factory with a capacity of 27,000 tons of ferronickel per year in Buli, Halmahera Timur, and North Maluku. The project is estimated to cost US$1.65 billion and it is to be operational in 2014.

PT. Antam also plans to build a Nickel Pig Iron (NPI) plant with an initial capacity of 120,000 tons of nickel per year. The factory is to be built in Mandiodo, Konawe Utara, and Southeast Sulawesi with an investment of US$ 140 million. The facility is to be operational in 2014.

Gold

PT. Antam has two gold mining concessions--in Pongkor, West Java and Cibaliung, Pandeglang, Banten. Currently the Pongkor mine has a reserve of 1,170,000 troy ounce of gold. The reserve is expected to be depleted in 2015 with the new reserves found in Cibaliung; PT. Antam now has a total gold reserve of 2,111,500 troy ounces.

In 2010, Antam's annual gold production reached only 2.8-2.9 tons including 2.58 tons from Pongkor and 0.5 ton from Cibaliung. The production fell short of the target of 3 tons as the Cibaliung mine started commercial operation only in May that year.

Based on the latest process of explorations, the Cibaliung mine had an economic life of 6 years. It is estimated to have total reserves of 1.5 million tons of gold ores. The reserves are found in the Cikoneng field with a reserve of 678,000 tons and Cibitung 839,000 tons.

The Cibaliung mine is operated by PT Cibaliung Source Daya (PT. CSD). It is wholly owned by PT Antam after acquiring a 95% stake of Australia's ARC Exploration Ltd.

PT CSD is expected to start full operation in 2011 with production capacity of 63,300 tons or 2 tons of gold per year until 2016. The Cibaliung gold mine is a deep under ground mine operated with cut and fill system.

Bauxite

PT Antam closed its old bauxite mine in Kijang, Tanjung Pinang, Bintan, in the last quarter of 2010 as the reserve had been depleted after exploitation since 1950. Normally the mine produced 1.1 million tons of bauxite per year, but in the past several years, the production began to decline. In the first half of 2009, the bauxite production of the Kijang mine totaled only 300,000 tons of bauxite.

Antam now has moved its bauxite mining operation to West Kalimantan. In 2011, PT Antam develops two new bauxite mines. The bauxite mine in West Kalimantan has a reserve of around 100 million tons and in 2011, the mine is expected to start operation with production of 300,000 to 400,000 tons.

PT Antam Tbk and Hangzhou Jinjiang Group of China cooperate to build factory to process bauxite ores to turn out smelter grade alumina (SGA) in Mempawah, West Kalimantan. The factory is to have an annual production capacity of 1,000,000 tons SGA. Construction of the factory is estimated to cost US$ 900 million currently, around 50% of alumina basic material for the aluminum factory in Mempawah will be supplied from other regions.

PT Indonesia Chemical Alumina (PT ICA), which is a joint venture 80% owned by Antam and 20% by Showa Denko K.K of Japan, plans to build a chemical grade alumina (CGA) plant. Construction is handled by a consortium of PT Wijaya Karya (Persero) Tbk, Tsukishima Kikai Co Ltd and PT Nusantara Energi Abadi (Nusea). The CGA factory, locate din Tayan, West Kalimantan, will have a production capacity of 300,000 tons of CGA per year. The factory is being built over an area of 15,000 hectare with an investment of around US$ 450 million. The project is expected to be operational in 2014.

Two power generating plants respectively in Mempawah with a capacity of 57 MW and 56 MW in Tayan with a capacity of 56 Mw to be integrated with the alumina plant.

By December 2010, the bauxite reserves owned by PT. Antam in West Kalimantan rose by 104.5 million WMT (Wet Metric Tons) or 47% from 100 million WMT in September 2009.

In 2010, PT Antam also built a coal-fired power plant with a capacity of 150MW in Pomalas, Southeast Sulawesi. With a cost of US$ 300 million, including US$ 75 million in loan from Japan Exim Bank.

Coal

PT Antam through its subsidiary PT Indonesia Coal Resources (PT ICR) has started to expand business in coal mining by acquiring a coal mine in Sarolangun, Jamb at a price of Rp 92.5 billion. The mine, which has a reserve of around 8.25 million tons of coal, has an annual production capacity of around 200,000 tons.

In 2011, PT ICR will increase the production capacity of its Sarolangun mine to 500,000 tons. The mine has coal with a calorific value of 5,300-5.500 kcal/kg.

The Sarolangun coal mine started operation in June 2010. Its coal production is partly exported to India and the rest to domestic consumers. The coal mine is also intended to guarantee coal supply to its power plants such as the power plant that generate electricity for Antam's ferronickel factories.

Meanwhile, PT. ICR is conducting explorations for coal in its mining concessions in Bangko of Jambi and Sorong of Papua. The coal expected to be produced from the concessions will be used to feed power plants (PLTU) in Pomalaa. The power plant needs around two million tons of coal with a calorific value of 5,000 kcal per year.

Financial performance

In 2010, PT Antam had assets valued at Rp 12.31 trillion up from Rp9.93 trillion in 2009.

Its income totaled Rp8.74 trillion, up 0.37% from Rp 8.71 trillion in 2009. The increase was attributable to increase in its sales of ferronickel and nickel ores rose and the commodity price hikes.

In the same year, the company reported net profit at Rp 1.6 trillion or an increase of 178.6% from Rp604 billion in 2009. The increase in net profit was attributable mainly to increase in sales of ferronickel and the commodity price hike.

Meanwhile, its cost of goods sold dropped with the decline in the sales of precious metals which give lower margin. Since early 2010, the company stops trading of precious metals amid price fluctuations.

In 2010, Antam's operations on nickel and gold mining grew. Gold mining grew with the operation of a new mine in Cibaliung. In 2011, PT Antam plans to give priority of operation in the downstream sector such as the development of Chemical Grade Alumina project in Tayan.

Altogether, nickel business contributes 69% to the total sales of PT. Antam in 2010. Business in other sectors such as gold, bauxite and ferronickel accounted for 31% of its sales in value.

A 49% increase in the price of ferronickel to US$ 10.12 per pound in 2010, resulted in a 71% surge in income from ferronickel business to Rp 3.679 trillion that year from Rp 2.150 trillion in 2009.

Meanwhile, sales of nickel ores also surged 20% in volume to 5,863,840 wet (wmt) in 2010 and at the same time the selling price rose resulting in 39% increase in the earning to Rp 2.364 trillion.

Sales of gold, however, fell 9.5% to Rp 1.91 trillion in 2010.

With the FeNi I, FeNi II and FeNi III factories are fully operational, PT Antam's production of ferronickel shot up 49% in 2010 to 18,688 tons compared with the previous year and its sales of that commodity rose 29% to 18,254 tons.

In 2010, its sales of gold totaled 2.78 tons including 2.485 tons from Pongkor and 295 kg from Cibaliung. In 2011, its gold production is projected to reach 3.804 tons. The production targets from Pongkor are set at 2.007 tons and from Cibaliung 1.797 tons.

Its sales of gold in 2011 are forecast to reach 7.304 tons up from 6.561 tons in 2010. In 2010, its sales of gold were valued at Rp 2.35 trillion with prices averaging US$ 1,227.52 per troy ounces.

Growing demand also pushed up sales of high grade nickel ores by 22% to 1,032,478 wmt in the last quarter of 2010 compared with in the last quarter of 2009. Sales of low grade nickel ores rose 199% to 770,549 wmt in the last quarter of 2010 compared with in the last quarter of 2009.

Production of ferronickel totaled 4,643 tons or an increase of 20% from 2009. Growing demand also pushed up its production of high grade nickel ores by 39% to 1,106,530 wmt in the last quarter of 2010 compared with the same period in 2009 its production of low grade nickel ores shot up 74% to 875,520 wmt in the last quarter of 2010 compared with the same period in 2009.

In the last quarter of 2010, PT Antam produced no bauxite ores with the closure of the Kijang bauxite mine, which had been completely depleted. Antam is now developing new bauxite mine in Tayan, West Kalimantan. The bauxite ores from Tayan will be processed into alumina.

Marketing

Most customers of PT Antam are big companies in Asia, Australia and Europe under long term contracts of one to three years. PT Antam also has long term off take agreements for up to 10 years for 15,000 tons of ferronickel per year with TKN from Germany and Posco of South Korea. Nickel ores are exported to ferronickel producers and all of its production of ferronickel is exported to the producers of stainless steel.

Most of its gold and silver production is sold to jewelry producers in the country and abroad and all of its bauxite production is exported to China and Japan and iron sand is sold to local cement producers.

Among new customers of PT Antam in East Europe include FeniMak from Macedonia (for IMR/Alferon) and Pobuzky in Ukraine. In 2004, Antam started exporting nickel ores to Razno.

Currently PT. Antam export bauxite only to China, which agrees to buy bauxite with high grade of silica.

Joint ventures

Currently PT. Antam has a mining concession of 923,000 hectares. It has 20 joint ventures operating in multifarious mining business.
Table--1
Proven and inferred reserve ('000 wmt) **

 Minerals Ores Change (%)

 2008 2009

Nickel Saprolite 56,400 50,350 -11)
Nickel Limonite -- -- --
Gold 4,450 4,058 -9
Bauxite 70,900 104,500 47

Source: PT. Antam Tbk

Note:

** The total reserves include in the reserves and mineral resources
tables as well as estimate of reserves of PT Cibaliung Sumber Daya

Table--2
Reserves and Mineral Resources ('000 wmt) * 2010

Minerals Ores Change (%)

 2008 2009

Nickel Saprolite 362,700 447,700 23
Nickel Limonite 372,500 498,850 34
Gold 5,337 8,304 56
Bauxite 201,200 347,200 73

Source: PT. Antam Tbk

Note:

Based on the report of Competent Person. Data on 31 December
2009, the estimate include estimate of nickel resources of PT Gag
Nickel, estimate of bauxite resources of PT Borneo Edo International
and PT Mega Citra Utama, estimate of gold reserves and resources
of PT Cibaliung Sumber Daya and estimate of detected gold
resources.

Table--3
Summary of financial report of PT Antam and subsidiaries
December 2009 and 2010

(Rp billion)

Description 2010 2009

Assets
Current assets 7,593 5,313
Non current assets 1,764 1,735
Fixed assets 2,953 2,891
Other assets -- --
Total assets 12,310 9,939
Liabilities and equity
Current liabilities 1,989 748
Non current liabilities 721 1,000
Other liabilities -- --
Total liabilities 2,710 1,748
Equity 9,580 8,149
Minority interest 20 42
Total liabilities and equity 12,310 9,939

Profit/loss:
Income 8,744 8,711
Net profit/loss 1,683 604

Source: PT Antam Tbk

Table--4
Sales value recorded by PT Antam, 2009 - 2010

Commodities 2009 2010 Growth
 (Rp billion) (Rp billion) (%)

Ferronickel 2,147 3,679 71
Nickel ores 1,696 2,364 39
Gold 2,120 1,918 -9.5
Silver 127 187 47.2
Bauxite 78 34 -56.4
Coal 2 24 1,100
Other metals 5 9 80

Source: Annual report of PT Antam Tbk

Table--5
Antam's sales in last quarters of 2009 and 2010

 Commodities Sales volume Sales volume Growth
 Q4 of 2010 Q4 of 2009 (%)

High grade nickel ore (wmt) 1,032,478 846,200 22
Low grade nickel ore (wmt) 770,549 387,211 199
Ferronickel (FNi) 18,254 14,150 29
Gold (kg) 6,561 9,776 -49
Bauxite(wmt) 191,615 298,919 -56

Source: Annual report of PT Antam

Table--6
Customers of PT Antam

 Products Names of customers Origin

Nickel Ore Pacific Metal Co. Ltd (PAMCO) Japan
 Sumitomo Metal Mining Co. Ltd (SUMICO) Japan
 Nippon Yakin Kogyo Co Ltd Japan
 Raznoimport Nickel (UK) Ltd Europe
 Avarus AG Europe
 Minsources International Europe
Ferronickel Pohang Iron & Steel Co. (Posco)-- South Korea
 Thyssen Krupp Nirosta, GmbH Europe
 Arcellor Mittal Europe
 Autolompu Stainless Europe
Gold and Silver Standard Bank Plc Singapore
 Producers of gold jewelry Indonesia
Bauxite Showa Denko KK Japan
 Zhong Nan Group Industry Co. Ltd China

Source: PT Antam

Table--7
Subsidiaries of PT Antam, 2010

Joint ventures Locations Products Areas (Ha)

PT Gag Nickel Gag Island, Nickel 13,136
 Papua

Asia Pacific Nickel Australia Nickel --
Pty Ltd

PT. Antam Jakarta Investment --
Resourcindo

PT. Indonesia Coal Jambi Coal 23,240
Resources

PT. Cibaliung Banten Gold 7,828
Sumberdaya

PT. Mega Citra West Bauxite N.a
Utama Kalimantan

PT. Indonesia Tayan, West Bauxite 36,410
Chemical Alumina Kalimantan

PT. Borneo Edo West Palm Oil N.a
International Kalimantan Plantation

PT. Abuki Jaya Stainless N.a
Stainless Indonesia steel

PT. Meratus Jaya Kalimantan Stainless --
Iron & Steel steel

PT. Dwimitra Kalimantan Bauxite N.a
Enggang Barat
Khatulistiwa

PT Nusa Gosowong, Gold 29,620
Halmahera Halmahera
Minerals Island,
 Maluku

PT Sorikmas Kotanopan Gold 66,200
Mining and Pagar
 Gunung,
 Sumatra

PT Weda Bay Weda Bay, Nickel 76,280
Nickel Halmahera,
 Maluku

PT Dairi Prima Dairi-Karo, Lead/Zinc 27,420
Minerals North Sumatra

PT Galuh Cempaka Martapura, Diamond 3,920
 Cempaka,
 Danau Seran,
 Kalimantan

PT. Sumbawa Sumbawa, Gold 19,238
Timur Mining West Nusa
 Tengara

PT Pelsart Gendang Gold 201,000
Tambang Kencana Timburu,
 South
 Kalimantan

PT. Gorontalo Gorontalo Gold 36,070
Minerals

 Share (%)

Joint ventures PT. Antam Partner Status

PT Gag Nickel 20 BHP Bilitons Feasibility
 (LSE/ASX Tbk) studies

Asia Pacific Nickel 100 -- Development
Pty Ltd

PT. Antam 100 -- Operational
Resourcindo

PT. Indonesia Coal 99.98 -- Production
Resources

PT. Cibaliung 99.15 -- Production
Sumberdaya

PT. Mega Citra 99,5 -- Explorations
Utama

PT. Indonesia 80 Showa Denko Development
Chemical Alumina KK, Japan

PT. Borneo Edo 99.5 -- Explorations
International

PT. Abuki Jaya 100 -- Development
Stainless Indonesia

PT. Meratus Jaya 34 PT. Krakatau Development
Iron & Steel Steel

PT. Dwimitra 100 -- Development
Enggang
Khatulistiwa

PT Nusa 17.50 Newcrest Production
Halmahera (ASX Tbk)
Minerals

PT Sorikmas 25 Aberfoyle Explorations
Mining Pungkut
 Investment
 Pte Ltd
 (ASX Tbk)

PT Weda Bay 10 Strand Construction
Nickel Minerals
 (Indonesia)
 Pte Ltd (joint
 venture
 Eramet and
 Mitsubishi)

PT Dairi Prima 20 Gain & Win Construction
Minerals Pte Ltd
 (subsidiary of
 Herald
 Resources
 (ASX Tbk)

PT Galuh Cempaka 20 BDI Mining Production
 Corp. (LSE/AIM
 Tbk)

PT. Sumbawa 20 Eastern Star Explorations
Timur Mining Resources
 Pty Ltd

PT Pelsart 15. Pelsart No activities
Tambang Kencana yet

PT. Gorontalo 20 International Explorations
Minerals Co LLC
 (subsidiary of
 PT. Bumi
 resources)

Source: Annual report of PT Antam
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Title Annotation:COMPANY PROFILE
Publication:Indonesian Commercial Newsletter
Article Type:Company overview
Date:Feb 1, 2011
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