Improvement Drive
    Category: Rightsizing the SOEs By : Sonya Angraini Read : 806 Date : Tuesday, August 06, 2013 - 06:49:47


    Courtesy of Antam

    State-owned miner PT Aneka Tambang (Antam) is this year celebrating its 45th anniversary, since its creation in 1968 through a merger of several state mining companies. As the company approaches the start of its second half-century, President Director Tato Miraza is focused on an efficiency drive, in response to the decline in the price of its two largest metals mined, gold and nickel (together they account for about 90% of all output and sales). Nickel has dropped 19% since the start of the year to $13,460 per tonne, and gold has dropped below $1,300 an ounce, a level not seen since late 2010. “We will not tolerate any cost overruns,” says Tato, 45, who was appointed last April. The other issue for the company is the ban on ore exports from 2014.

    To improve efficiency, Tato has started renegotiating contracts with vendors, suppliers and contractors. Antam usually ships nickel ore from Halmahera to its ferronickel plant in Pomalaa, Sulawesi. Now it will try to use raw material from the same area to reduce shipping costs. It is also trying to find ways to improve energy efficiency in the company. Tato says the company's efficiency efforts have resulted in Rp 26.2 billion of savings during the first half of 2013. The Rp 26.2 billion in savings was 44% of the year's target of total savings of Rp 59.2 billion. 

    Other efforts to improve efficiency include its new chemical grade alumina (CGA) project in Kalimantan, the first CGA plant in Southeast Asia (CGA is a raw material used in paints, building material and LCD glass). The plant is a joint venture between Antam (80%) and Japanese chemical firm Showa Denko K.K. (20%), and represents a $490 million investment. The plant will produce 300,000 wet metric tons (wmt) of CGA per year, of which 200,000 wmt will be exported to Japan. The remaining 100,000 wmt will be marketed locally or to countries outside Japan. Production is expected to begin in October.

    The original start had been January 2014, but Tato moved up the date as the sooner it starts, the faster the plant can create a value-added product that mitigates the decline in commodity prices. “We must optimize everything we have,” says Tato, who has spent 21 years at Antam, after getting degrees in metallurgical engineering and a master's in management.

    The CGA project will fit Antam's strategy to explore downstream markets, and overcome projected revenue losses from the upcoming ore export ban, says Bahana Securities analyst Ricky Ho in a July report. In addition to CGA, the company will also build over the next three years a smelter grade alumina (SGA) plant to be located in West Kalimantan. Tato says the company just finished the feasibility study and the plant will have a capacity of 1.2 million wmt of SGA per year, with a required investment of around $1.5 billion. The construction is planned to start in 2015.



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