State-owned mining company PT Aneka Tambang (Antam) and Japanese chemical firm Showa Denko KK are turning their backs on each other over their chemical grade alumina (CGA) project, PT Indonesia Chemical Alumina (ICA).
Antam currently has an 80 percent of stake in ICA — which operates a CGA plant in Sanggau, West Kalimantan — while Showa Denko holds the remainder. In the joint venture (JV), each party is bound to offer its stake to its counterpart and can only divest shares to a third party if the counterpart turns down the offer.
However, the ICA case is unique as both parties are eager to leave or reduce their ownership in the partnership.
Thus, both have rejected their counterpart’s share offers and are looking for a third party to absorb their ‘unwanted’ shares.
“To exit the partnership, we must follow some steps […] they must find a substitute in the JV. Our stance remains the same, we want to decrease ownership in ICA,” Antam Finance Director Dimas Wikan Pramudhito said during a public expose event at the Indonesia Stock Exchange (IDX) building, Jakarta, on Monday.
In 2016, Antam offered some of its stake to Showa Denko only to be rejected over a disagreement regarding the terms and conditions. In July, the Japanese company announced that it would quit the joint venture and wrote off a ¥10 billion (US$90.3 million) loss on investment in its balance sheet with regard to ICA.
Both companies have so far declined to explain the details of the problem. Dimas said only that there were some obligations to the vendors and suppliers that had failed to be met.
In an official statement, Showa Denko said it had been discussing ways to manage the ICA plant in the future with Antam, but bumped onto “a great difference between the shareholders’ opinions on new terms and conditions to revive ICA.”
The CGA plant started construction in 2011 and began operation 2014. According to Investment Coordinating Board (BKPM) data, it cost $352.2 million in total investment to build the plant.
According to Antam’s financial report, ICA in the first quarter of the year recorded Rp 41.73 billion in net income, a recovery from the Rp 458.15 billion in net losses recorded in the same period last year, partly owing to lower interest costs at Rp 16.63 billion, compared to Rp 86.3 billion in the first quarter of 2016.
However, the company’s revenue fell drastically by 63 percent to Rp 175.27 billion, compared to Rp 471.95 billion in the same period last year.
The harsh situation also hit Antam, which saw a 48.29 percent drop in its gold sales to 2,788 kilogram in the first half compared to 5,392 kg in the same period last year. In the first semester of 2015, the company sold 10,996 kg of gold.
“The decline in gold sales has occurred because of an [system] error erupted in our gold smelting at the beginning of 2017,” Antam corporate secretary Aprilandi Hidayat Setia said.
The company has not published its second quarter financial report yet, but gold traditionally contributes to 70 percent of Antam sales.
However, in other minerals, Antam saw sales increase. Ferronickel sales rose by 15.26 percent year-on-year (yoy) to 9,327 tons compared to 8,092 tons in the first half of 2016, and bauxite sales climbed by 12.51 percent to 128,232 metric tons compared to 113,972 metric tons in the same period last year.
The company obtained a one-year license from the Energy and Mineral Resources Ministry in May to export 2.7 million tons of nickel ore. So far, it has shipped 275,513 tons of nickel ore to Japan, China and Eastern Europe.
To cater to the potential recovery of nickel ore demand, the company is in the process of gaining an additional export quota of up to 3.7 million tons.
Source: Anton Hemanshyah / The Jakarta Post ‘Antam, Showa Denko to Retreat From JV’
8 August 2017