Antam will spend Rp 9 trillion to upgrade ferronickel plant

State owned mining company PT Aneka Tambang Tbk (Antam) will spend up to Rp 9 trillion in 2013, a 76 percent increase from Rp 5.1 trillion this year, in capital expenditure to finance expansion projects including to upgrade the company?s ferronickel processing plant.

According to Standard & Poor?s Ratings Services (S&P) report published on Thursday, Antam already raised US$ 2.5 billion in capital expenditure in next few years, mostly for 2013. ?Most of the capital expenditure will be financed by loans,? said S&P as reported by Investor Daily.

According to the rating agency, , Antam has raised about Rp 3 trillion from the issuance of bonds to finance the modernization of a ferronickel plant in Pomaala, Sulawesi. In addition, the mining company has also received $175 million in loan to finance its chemical-grade alumina project PT Indonesia Chemical Alumina (PT ICA).

Besides ICA, Antam will also finance other new projects including a ferronickel processing plant in East Halmahera which will be worth $1.6 billion, a smelter-grade alumina (SGA) in Mempawah and nickel pig iron (NPI) plant in Mandiodo.

Antam?s president director Alwin Syah Loebis said that the capital expenditure would be stated in the 2013 budget and working program (RKAP). The company is still drafting the RKAP.

The rating agency said that higher capital spending could strain the company's cash flows more than expected.

With such higher than expected spending, Standard & Poor's Ratings Services said it has revised its outlook on Antam to negative from stable. At the same time, the rating agency also affirmed the 'B+' long-term corporate credit rating on the company.(*)