Kalimantan’s $5.6b Smelter To Operate in 2012: Official
Ririn Radiawati Kusuma
Operations at Dubai-based MEC Holdings’ aluminum smelter in East Kalimantan are expected to start as soon as next year, a local government official said on Wednesday.
Construction of the $5.6 billion smelter, a joint venture between MEC and India’s second-largest aluminum producer, Nalco, began in East Kutai district last year.
“They are working on the project now,” Isran Noor, East Kutai district head, said on Wednesday in Jakarta. “I hope that by the end of 2012 they will finish the project.”
Nalco operates in Indonesia through its subsidiary Nalco International. MEC is a subsidiary of Trimex Group, a mineral resources company based in the United Arab Emirates.
The project comes as the Indonesian government prepares to enforce a regulation that will require all miners to build smelters in an attempt to boost the value of exported commodities and create more local jobs. Under the rule, which will come into effect in 2014, all mining companies will have to process raw commodities, ranging from precious metals like gold to base metals like tin, before they are shipped overseas.
The MEC-Nalco aluminium smelter is being built in Muara Wahau, East Kutai. According to the two firms’ Web sites, the facility will be supported by a 1,400-megawatt power plant and a 150-kilometer railway linking with a port in Lubuk Tutung, also in East Kutai.
Once it starts operating, the aluminum smelter will be able produce 50,000 tons of aluminum wire per year. The facility will be the third smelter producing the commodity in Indonesia, with the Indonesia Asahan Aluminium (Inalum) smelter and another facility operated by Nalco being the others.
Muara Wahau was selected as the site for the project because the area contains huge coal resources that would be able to fuel the power plant and bauxite reserves that can be processed into aluminum.
Nalco has been investing heavily in Indonesia over recent years. The Indian state-owned company invested as much as $3 billion to build a power plant and aluminum smelter in South Sumatra, according to the company’s Web site. The South Sumatra project, which started operations in 2006, can produce as much as 500,000 tons of aluminium wire each year.
Indonesian miners, such as state-owned gold miner Aneka Tambang and tin producer Timah, have said they supported the government’s regulation on processing raw commodities, and have announced plans to build smelters in their respective plants.
Weda Bay Nickel, 10 percent owned by Aneka Tambang and 90 percent by French mining giant Eramet, have also announced plans to build a smelter in Halmahera, North Maluku, at an estimated cost of $4.6 billion. Construction of the facility is scheduled to start in 2013 and would be built in cooperation with Mitsubishi of Japan and Aneka Tambang.