JAKARTA: Major nickel producer Vale Indonesia continues to reign in costs even as the value of nickel has shown slight recovery following a long period of sluggish prices.
Although prices have slightly improved compared to the first two quarters of the year, they remain lower than last year, leading to lower revenue. In the January-September period this year, Vale Indonesia’s revenue dropped 33.8 percent to US$405.46 million from $613.13 million in the same period last year.
In order to counter the low prices, the publicly listed firm has made short and long-term efficiency measures, says president director Nico Kanter. This includes a temporary hiring freeze and diversifying energy and fuel resources in its operations.
“Why is becoming the lowest cost producer our main goal? It’s because this is what we feel is something we can control. The nickel business is very dependent on nickel prices. While nickel prices and the global market is out of our hands, controlling our production costs is within our control,” Nico said during a public event on Monday.
Nickel prices this year recovered from a 42 percent plunge last year. On Monday, nickel rose 3 percent on the London Metal Exchange, Bloomberg reported.
Vale Indonesia finance and controller director Bayu Widyanto said the prices had risen slightly because of a decrease in global nickel supplies caused by several nickel mines and factories shutting down due to economic infeasibility.
Nickel prices also received a boost surrounding concerns about production in the Philippines, the world’s largest supplier. Almost a quarter of the country’s nickel mines have been shutdown due to concerns over the environment. The Philippines is the biggest supplier of nickel ore to China.
Even so, Vale Indonesia sold its nickel matte for $7,694 per metric ton during the third quarter, down 25 percent, from the same period last year. However, this was an improvement from the second quarter’s $6,823 per metric ton.
The firm — owned by Vale Canada Limited, Sumitomo Metal Mining Co. Ltd., Vale Japan Limited, Sumitomo Corporation and the public — currently owns three hydroelectric power plants with a combined capacity of 365 MW in South Sulawesi, all of which produces energy from the surrounding Matano, Mahalona and Towuti lakes.
Simultaneously, the company is also attempting the second stage of its coal conversion project for its reduction rotary kilns and dryers, which are dependent on high sulfur fuel oil (HSFO). Bayu cited that using coal was much more efficient as 1 ton of coal could replace three barrels of HSFO.
