One of the largest nickel smelter company in Indonesia, PT Vale Indonesia Tbk (INCO) allocates US$ 580 million (IDR 8.43 trillion) in capital expenditure (Capex), which will be used for the development of smelters in Pomalaa and Bahodopi. The company hoped to increase both smelter’s production capacity.
Vale Indonesia is the 30% shareholders of the smelter in Pomalaa block, while the remaining shares are owned by Ford Motor Co., and a Chinese corporation Zhejiang Huayou. Meanwhile, the Bahodopi blok’s shareholders consists of Vale Indonesia, Taiyuan Iron & Steel (Grup) Co., Ltd (TISCO), and Shandong Xinhai Technology.
As of Q1 of 2023, Vale Indonesia had only absorbed around US$ 58 million of the total allocated fund.
Vale hopes the projected development with contribute to production
“The absorption is still small, out of the US$ 58 million, US$ 25 million was used to sustain capital expenditure and the rest is for growth. Later in the following quarters it will increase, so that it is projected that in one full year it will reach US$ 580 million,” said Vale Indonesia Direcotor Bernardus Irmanto on May 5, 2023.
For early 2023, Vale Indonesia has prepared Capex worth US$ 110 million, equivalent to IDR 1.71 trillion, for the development of the Pomalaa and Bahodopi projects.
From an operational standpoint, Vale hoped that by resuming furnace number 4, production can increase to 90,000 tons. In 2023, Vale hoped that nickel prices can still support the company’s financial performance by moving around US$ 20,000 per ton.
“Vale’s revenue and profit next year will depend heavily on commodity prices that follow market mechanisms. We hope nickel prices will still be above US$ 20,000 per ton and coal or oil commodity prices will start to fall. Under such conditions it is expected that the company will record good performance, good finances,” said Irmanto.
Vale’s financial performance
In terms of performance, in Q1 2023, Vale recorded a net profit growth of 207% on a Quarter-on-Quarter (QoQ) basis with an increase in nickel prices and higher company production. Net profit was recorded at US$ 98.1 million or IDR 1.45 trillion.
However, on a Year-on-Year (YoY) basis, Vale’s net profit in Q1 2023 increased by 45.09% compared to Q1 2022 of US$ 67.64 million.
Febriany Eddy, CEO and President Director of Vale Indonesia explained that the company’s nickel in matte production in Q1 2023 was 21% higher or equals to 16,769 tons compared to Q4 2022 of 16,183 tons. The company targets production of 70,000 tons in 2023, slightly higher than last year’s 64,000 tons.
“In Q1 2023, nickel prices were at a favorable level and prompted Vale to post a strong net profit of US$ 98.1 million [equivalent to IDR 1.45 trillion], an increase of 207% compared to the previous quarter’s net profit,” said Irmanto.
In addition, Vale recorded revenue of US$ 363.18 million, equivalent to IDR 5.4 trillion, up 54.49% from the same period last year of US$ 235.08 million.
Dividend to be paid by end of May
Furthermore, Vale will be paying out a dividend of IDR 937.39 billion (US$ 60.12 million) on May 31, 2023. According to Irmanto, considering the company’s cash condition and projected capital expenditure and working capital needs for the continuity of the Company’s business, it plans to distribute 30% of net income for the financial year December 31, 2022, to the shareholders.
“Shareholders will receive US$0.00605 or IDR 94.33 for every one share they own and will be paid by the Company on May 31, 2023,” explained Irmanto.
