Brazilian mining powerhouse, Vale S.A, has enjoyed continued growth in its revenue and matte nickel output in Indonesia during the second quarter of 2020. Publicly listed PT Vale Indonesia (INCO), its local business unit, has booked a sales increase (YoY) at the end of this year’s second quarter, which follows the positive performance it enjoyed in 2020’s first quarter.
The company booked revenue of $185.7 million (Rp 2.71 trillion) at the end of this year’s second quarter, up 6.3% (QoQ) from $174.6 million in the first quarter. INCO recorded $360.37 million during 2020’s first semester, which is a 23.3% growth compared to last year’s first semester. Meanwhile, the company recorded a net profit of $24 million in 2Q-2020, down 17.2% from $29 million in the first quarter, mainly caused by lower income tax benefits. Despite the drop, INCO significantly performed better in the first semester of 2020, booking $53.12 million in net profit instead of a $26.2 million net loss in last year’s first semester.
In terms of production output, INCO produced 19,887 tonnes of nickel in matte in the second quarter, up 12.9% instead of 17,614 tonnes in the first quarter. Vale Indonesia has adjusted its production target from 71,000 tonnes to 73,000 for 2020, as the company recently decided to postpone its 4th furnace maintenance to 2Q-2021.
According to Bahana Sekuritas analysts Aryo Aliyudanto Sunaryo and Lucky Ariesandi, the global nickel balance is expected to still be in surplus next year, albeit with potentially a narrower margin.
“We expect the nickel balance to remain in surplus, due to growing investments in construction projects and electric vehicle car sales. As many are aware, the European market recorded a 93% month-to-month increase in electric vehicle plug-in sales in June 2020 with 93,000 units, driven by tax incentives in the continent,” says Aryo and Lucky in a recent report.
Furthermore, they believe that nickel balance will be less likely to be in deficit next year, as the nickel supply will partially be secured by 12 Indonesian smelters that, in total, will potentially produce over 100,000 tonnes of nickel per month in 2021.
INCO had spent around $44.3 million in capital expenditures in this year’s second quarter compared to $33 million in the first quarter.