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Chinese firms plan to invest $8.6 billion in Indonesia

(Reuters)
Updated: 2012-08-31 14:34
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Chinese firms plan to invest $8.6 billion on aluminum and iron smelter projects in Indonesia, the industry minister said Thursday, in a bid to guarantee supplies of metals under threat from a ban on exports of mineral ores from 2014.


Indonesia, a major supplier of metal ores to China, currently has no smelters to process bauxite ore into aluminum, and is trying to drive investment in domestic smelting by slapping a 20 percent tax on raw ores ahead of the outright ban.


"The projects are forward moves in the metal refining industry in Indonesia. We hope the two projects contribute to national economic growth by reducing import product dependency and strengthening the domestic metal industry structure," Industry Minister Mohamad Hidayat said. The companies are Beijing Shuangzhongli Investment Management Co, Oriental Mining and Minerals Resources Co and Rui Tong Investment Co, he said.


Three of China's biggest alumina producers are also planning to spend at least $1 billion on Indonesian bauxite mines and an alumina project, industry sources said this month, another sign that the Indonesian curbs are driving major investment in metal processing.


China accounts for about 40 percent of the global aluminum market. Indonesia supplied about 80 percent of the 25.42 million tons of bauxite China imported in the first half of the year, but its exports dropped sharply in June and July after the new regulations restricted unprocessed ore exports.


Firms now have to submit plans to either build smelters or to process their ore locally, before being allowed to export raw ore from Indonesia. Many small scale miners have simply halted output instead.


Hidayat said Shuangzhongli planned to invest $7.1 billion to build an alumina refinery with a total production capacity of 1.8 million tons per year and an aluminum smelter with a total production capacity of 600,000 tons of aluminum ingot per year and a 1,250 megawatt power plant.

 

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