Indonesia Reviews Plans for $550b in Smelter Investments
ID/Retno Ayuningtyas & Ester Nuky
A ban on the export of raw mineral ores from Indonesia due to take effect in 2014 has accelerated plans for investment in smelters in the resource-rich country.
Rudi Rubiandini, the deputy minister for energy and mineral resources, said 185 proposals had been submitted by investors to the ministry. That amounts to $555 billion in investments — more than two-thirds of Indonesia’s gross domestic product.
The deputy minister voiced a note of caution, however, that the plans were not guaranteed. “It does not mean all the plans to build smelters will be realized,” he said.
He added that the government was reviewing the proposals and would draw up a shortlist of potential investors that “really have the money.”
In May, the Finance Ministry imposed a 20 percent duty on 65 minerals, as it began to curb the export of unprocessed ores and boost state revenue.
Rudi went on to say that at least four of the biggest miners would definitely build smelting plants.
“One thing is for sure, big companies that have already agreed to build smelters include Freeport Indonesia, Vale Indonesia, Eramet and Aneka Tambang,” he said.
Freeport Indonesia, the local arm of US-based mining giant Freeport-McMoRan Copper & Gold, has already gone on record saying that it would send its minerals from the enormous Grasberg mine it operates in Papua to a smelting facility in Gresik, East Java. Freeport spokesman Ramdani Sirait said 45 percent of the copper and gold mined there would go to the East Java plant.
Vale Indonesia, a subsidiary of the Brazil-based Vale, the world’s second-largest mining company, said it would invest $2 billion to expand a smelter in Sorowako, South Sulawesi. It is also seeking to build a refinery in Bahodopi in Central Sulawesi.
The investment is expected to double production of nickel matte — a 78 percent intermediate nickel product — in Sorowako to 120,000 tons. Currently, Vale export all of its nickel matte to Matsusaka, Japan.
French miner Eramet has said it plans to spend $6 billion, beginning with a $450 million investment, to develop a nickel and cobalt mine and a refinery on Halmahera Island in North Maluku, according to chairman Patrick Buffet, who has worked as an advisor to the French government.
Antam is busy building an aluminium plant in Tayan, West Kalimantan, for $450 million. It is also building a $1 billion plant in Pontianak in the same region.