TRANSFIGURING NICKEL DOWNSTREAM STRATEGY FOR ANTAM – A STATE OWNED MINING COMPANY IN SUSTAINING FUTURE BUSINESS

• Main Author: Faisal Alkadrie, Sy.
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/53340
• Institution: Institut Teknologi Bandung

Through the Ministry of Energy and Mineral Resources, the Government of Indonesia conducts a ban on the export of unprocessed nickel resources on 1st January 2020. The decision is made because nickel ore was already processed in domestic due to the rapid investment in nickel downstream smelters. The other reason is that electric vehicle’s demand is increasing and promising in the future since nickel is the main component of electric vehicle batteries. Mining Industry Indonesia, as the holding of mining state-own enterprise also supported this decision and mandated their subsidiaries, including ANTAM, about reserve ownership, downstream business, and market leadership. ANTAM, as a member of Mining Industry Indonesia, has an abundance of nickel resources and could potentially monetize it to the downstream in order to improve their performance and achieve their vision 2030. Then, the corporate strategy should be transfigured to formulate the best options to monetize their abundant nickel resources, identify the downstream strategy by considering the limitation that ANTAM has, and propose the best strategy in the nickel business to create a better growth in their performance. In creating the corporate strategy, analysis is explored using qualitative tools and frameworks. PESTEL (Political, Economic, Sociocultural, Technological, Ecological, and Legal) analysis and Porter’s Five Forces framework are conducted as external environment analysis and VRIO (Valuable, Rare, costly to Imitate, Organized) framework are utilized as internal environment analysis by collecting primary data through interviews and secondary data through literature review. Thus, the corporate strategy is formulated by the Corporate-Grand Strategies framework that consists of Stability Strategy (No Change Strategy, Profit Strategy, and Pause/Proceed with Caution Strategy), Expansion Strategy (Expansion through Concentration, Diversification, Integration, Cooperation, and Internationalization), Retrenchment Strategy (Turnaround, Divestment, and Liquidation), and Combination strategy (Simultaneous, Sequential, and Combination of Both). The result shows that the best options for ANTAM to monetize their abundant nickel resources that consist of saprolite and limonite are to go downstream through class 2 nickel value chain, producing FeNi and NPI to supply Stainless Steel company, and class 1 nickel value chain, producing Mixed Hydrate Precipitate or Mixed Sulphate Precipitate to supply Electric Vehicle Battery chain producers. To realise it, ANTAM has limited capabilities in funding, technology and operation, and marketing expertise. These limitations could be encountered by efficiency and partnership schemes such as merger and acquisition, joint venture, strategic alliance, and asset divestment (mining business licenses and smelters) that also could reduce their investment risk. Therefore, the best strategy in the nickel business to create a better growth in ANTAM’s financial performance and achieve their vision 2030 could be divided into three big themes. They are: strengthen the business (selling nickel ore, produce FeNi Pomalaa, turnaround FeNi North Maluku), growth downstream business (Saprolite ore for class 2 nickel and Limonite ore for class 1 nickel), and future downstream business (acquire or build stainless steel plant and internationalization of stainless steel and electric vehicle battery value chain). To smooth the strategy implementation, it is recommended to ANTAM to have a strong commitment of top management and employee, choosing the right strategic partner carefully, and conduct proper Feasibility Study by an independent and qualified consultant. The annual long-term planning that consisted of person in charge and timeline is also proposed to implement those strategies.