Three Chinese firms will invest US$8.6bn to build mineral processing facilities this year in Indonesia, a key supplier of metal ore to China, Industry Minister MS Hidayat said.

The commitment was marked by two memorandums of understanding signed by the Industry Ministry’s director general for manufacturing-based industry, Panggah Susanto, and representatives of the Chinese firms on 30 Aug.

Oriental Mining and Minerals Resources Co. Ltd. and Rui Tong Investment Co. Ltd. will spend $1.5bn until 2019 to build a plant in West Java to process iron sand into direct reduced iron. The plant, expected to begin operation in 2016, will have the annual capacity to produce 6Mt/y of direct reduced iron used for steelmaking and casting.

Elsewhere, Beijing Shuang Zhong Li Investment Management Co. Ltd. will invest around $7.1bn until 2020 to build an alumina refinery, an aluminium smelter and 1,250 megawatts in supporting power plants in Riau or West Kalimantan. The refinery, expected to produce 1.8 million tons of alumina per year, is expected to start
operation in 2015, while the smelter, expected to produce 600kt ingots a year, is slated
to start service in 2018.

The investment comes after Indonesia, one of the world’s biggest suppliers of several mineral commodities, plans to impose a 20% export tax on 65 types of mineral commodities next year and completely ban raw mineral exports by 2014 to encourage investment and development in refineries and smelters.

The Chinese firms would team up with local partners for the projects were currently in talks for potential joint ventures, Hidayat said.

Source: Daily The Jakarta Post, Jakarta; 31 Aug 2012