Vale Indonesia, the country’s biggest nickel miner, posted a 64 percent increase in profit in the first nine months of this year on the back of rising production and improving operations.
In a statement released on Thursday, the company said that its net income jumped to $47.28 million in the January-September period from $28.94 million in the corresponding period last year. Revenue rose to $721.07 million from $693.69 million.
Vale said in the statement that its success in improving its cost competitiveness helped its financial performance “even in these challenging market conditions.”
The company, controlled by Brazilian iron ore giant Vale, is currently shifting to fueling its dryers with coal rather than the more expensive high-sulphur fuel oil. The conversion began in the middle of the third quarter. Vale consumed 608,058 barrels of HSFO at an average cost of $99.65 per barrel throughout the quarter.
That compares with 679,306 barrels of consumption in the second quarter at $100.76 average cost per barrel.
The cost of revenue in the third quarter was down 10 percent from the second quarter, but cost of revenue for the nine-month period was still 1.1 percent higher than the same period last year.
“HSFO consumption should further decrease when [coal conversion project] is in full operation,” the company said.
The company also increased its production to 57,503 metric tons of nickel in matte in the nine-month period, from 49,411 tons a year earlier.
It also sold 58,621 tons of nickel matte, 16 percent higher than sales by volume a year earlier.
However, the price of nickel remains weak. Vale’s average selling price for its nickel was down by 10 percent to $12,301 per ton.
Vale Indonesia plans to invest $2 billion to expand its smelter in Sorowako, in South Sulawesi, and build a refinery in Bahadopi, in Southeast Sulawesi.
However, the company is still waiting for a contract renegotiation with the Indonesian government.
The $2 billion investment is expected to double its production capacity in Sorowako to 120,000 tons of 78 percent nickel.
The planned refinery in Bahadopi will absorb 18,000 tons of the nickel ore production from Sorowako and refine it into 98 percent nickel.
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