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Indonesia-China venture starts second phase of smelter project

Publication Date : 19-03-2014


Sulawesi Mining Investment, a joint Indonesia-China venture, aims to kick off the second phase of its smelter construction project in the second quarter of this year with a price tag of around 1.04 billion US dollars.

Sulawesi Mining deputy president director Alexander Barus said Tuesday the company was planning to start in May or June and it expected to complete the phase before 2018.

Once the project is finished, it is expected to increase the capacity of Sulawesi Mining'ssmelter by 600,000 tonnes of ferronickel a year, adding to the 300,000 tonnes capacity expected from the first smelter, which is still under construction under the first phase of the project.

“We will involve other investors because we need a sizeable investment for the second phase. Some investors have expressed interest,” he told reporters after a meeting with Industry Minister MS Hidayat at his office.

In the second phase of the project, the firm also plans to build a coal-fired power plant to generate 300 megawatts (MW) of electricity.

Sulawesi Mining-- owned by local business entity, Bintang Delapan Group, and China’s Tsingshan Holding Group-- is developing nickel smelter supporting infrastructure in Morowali, Central Sulawesi, which will cost around 1.9 billion dollars and run in two stages until the scheduled finalization in 2018. The first stage needed 722.30 million dollars in investment.

The construction of the smelter by Sulawesi Mining follows a government regulation that banned exports of unprocessed mineral ore starting mid-January this year. The policy aimed to spur growth in the downstream industry and allow the country to benefit more from its abundant natural resources.

Barus said that at present, the construction of the first smelter was still on track to meet its operational schedule of mid-2015.

"The construction is between 40 per cent and 45 per cent complete, while we have almost finished the procurement process for the smelter,” he said.

Once the first smelter is finished, it will produce 300,000 tonnes of ferro nickel yearly, all of which will be exported.

To meet the smelter’s energy needs, the firm is also constructing a 2x65 MW coal-fired power generator at the site.

Barus said the smelter would source nickel ore from PT Bintang Delapan Mineral, a subsidiary of Bintang Delapan, which secured a mining permit for a 47,000-hectare area in Morowali.

In the initial phase of the smelter’s operation, it would need around 3 million tons of nickel ore and when the smelter reached its full capacity, it would absorb roughly 9 million tonnes per year to generate a total 900,000 tonnes of ferro nickel, he added.

The whole output is slated for domestic use to supply a planned stainless steel mill of Shanghai Decent Investment Co. Ltd., a Chinese firm. The mill is designed to have a capacity of 2 million tonnes per year, according to Barus.

The smelter and the steel mill will form part of an integrated industrial estate — Indonesia Morowali Industrial Park — set to be developed in Morowali under the cooperation of Bintang Delapan and Tsingshan Group. The industrial park, to be supported by, a seaport and an airport, can accommodate about 100 firms.


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