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Profit at Vale Indonesia, the country’s largest nickel producer, plummeted 91 percent in the first nine months this year from a year earlier amid falling commodity prices.
In a statement on Tuesday, the company said its net income in the first nine months shrunk to $28.9 million, from $319.9 million in the same period last year. Revenue over the same periods fell 31 percent to $693.7 million.
Vale said the average selling price of nickel in matte realized by the company in the first nine months of 2012 was 29 percent lower than the average price recorded in the same period last year.
“The lower price resulted in the company recording 31 percent lower sales in the period compared to the corresponding period in 2011,” the company said in the statement.
During the January-September period, Vale produced 49,411 metric tons of nickel in matte and shipped 50,611 metric tons of the metal, which was 1.2 percent lower than the deliveries for the first nine months of 2011.
However, in the period of July to September, the company’s earnings showed big improvement after Vale completed the repair of a critical furnace.
Its net income jumped to $23.4 million in the third quarter from just $1.7 million in the second quarter.
In the fourth quarter of 2011, an incident forced the company to shutter operations at one of its furnaces while continuing with the maintenance of another furnace. That left Vale with only two of its four furnaces functional earlier this year.
Nickel in matte production improved to 20,418 metric tons in the third quarter, from 16,562 metric tons the previous quarter.
The statement also said the company had doled out $31 million in capital expenditure in the third quarter of this year, which was mostly used to construct a dryer coal conversion project that aims to improve cost efficiency.
Vale Indonesia is also planning to invest $2 billion to expand its smelter in Sorowako, South Sulawesi, and is building a refinery in Bahodopi, Central Sulawesi.
The company plans to double its production capacity in Sorowako to 120,000 tons of 78-percent nickel while building the refinery in Bahodopi, which will have the capacity to absorb 18,000 tons of Sorowako’s production, refining it into 98-percent nickel.
Shares in Vale rose 5 percent to Rp 2,625 on Tuesday, but have fallen 18 percent so far this year amid concern of weak demand for metal commodities including nickel.