Indonesia's Antam sees end to nickel's run

By Fitri Wulandari and Harry Suhartono

JAKARTA (Reuters) - An undersupply of nickel that has sent prices soaring has another 18 months or so to run until supply catches up, Indonesia's PT Aneka Tambang Tbk (Antam) (ANTM.JK: Quote, Profile, Research, Stock Buzz) said on Monday.

Antam is boosting output 40 percent this year, mirroring other miners racing to capture higher metal prices while they last, Dedi Aditya Sumanagara, Antam's president director, said in an interview for the Reuters Global Mining and Steel Summit.

Nickel is trading near all-time record peaks of $50,000-plus a tonne on the London Metal Exchange, with the average price over the past 12 months standing at $35,387 per tonne. The average price in 2006 was $24,185 per tonne.

Stocks of nickel in LME-registered warehouses stand just a touch higher than a day's global consumption.

Sumanagara said he expected average nickel prices to hover between $16-17 a pound ($35,273.6-37,478.2 per tonne) until next year before recoiling to $13 a pound in 2009.

STILL BULLISH

"I'm still bullish on the mining sector in the coming years. Even if prices decline in the future, they will not return to previous levels," Sumanagara predicted.

Antam, which produces nickel from three smelters in Indonesia, saw first-quarter net profit leap to 1.07 trillion rupiah from 131 billion rupiah a year ago, thanks in large part tot nickel's new-found value.

"What analysts did not expect was China's phenomenon, not only on the demand, but also the supply side," he added.

He said an unexpected 45,000 to 50,000 tonnes of "nickel pig iron" entered the market last year via China and that tonnage may rise to 70,000 tonnes in 2007 he warned.

The biggest lifts in nickel supply are slated to occur in Australia and nearby New Caledonia.

Through its 60 percent subsidiary, Societe le Nickel (SLN), Eramet has largely been alone in New Caledonia for more than 100 years, despite geologists long believing the island holds a quarter of all the world's nickel.

That may change soon after two big corporate takeovers late last year.

Brazil's CVRD (VALE5.SA: Quote, Profile, Research, Stock Buzz)(RIO.N: Quote, Profile, Research, Stock Buzz) this year paid $17.6 billion for Inco of Canada, second in size only to Russia's Norilsk (GMKN.MM: Quote, Profile, Research, Stock Buzz).

In addition to giant nickel deposits in Canada and Indonesia, the acquisition delivered CVRD the Goro nickel mining and smelting project in New Caledonia, where Inco had already spent more than $1 billion developing.  Continued...