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Inco Forges Ahead With Plans to Build Smelter in C. Sulawesi
Ririn Radiawati Kusuma | July 29, 2011

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International Nickel Indonesia, the country’s largest nickel producer, has received a license from Central Sulawesi’s provincial government to build a ferronickel smelter there, making it compliant with new regulations to process minerals before export.

“We are doing our feasibility study, which is soon to finish, so we can talk about the exact cost to build the smelter,” Tony Wenas, president director of the company, also known as Inco, said on Friday.

Financing for the project, which is estimated to cost $500 million, would come from internal funds, he added.

Inco will work with two Chinese steel companies, Baosteel Resources and Pan China International, to build the smelter under a joint venture that was signed in May.

The central government has instituted regulations to ban the export of raw mining materials in a bid to boost investment in processing facilities to add value to exports and create jobs.

State-controlled mining company Aneka Tambang (Antam) said it was also cooperating with state utility Perusahaan Listrik Negara to build an integrated ferronickel smelter and power plant in eastern Indonesia this year. The plant is planned for Tanjung Buli on Halmahera Island in North Maluku.

Alwinsyah Lubis, Antam’s president director, said last week that construction of the smelter, which would be the company’s second, was expected to start in November. He said it would have an annual capacity of 27,000 tons once operations began in 2014.

Inco already has a processing plant in Soroako, South Sulawesi, which has a capacity of 75,000 tons of nickel matte per year. However, over the next five years, the company expects to produce as much as 90,000 tons.

Tony said the planned smelter would be able to process that nickel matte into ferronickel, a component of stainless steel, which would then be sold to Japan.

The project would also include the purchase of an upcoming nickel block in Bohodopi, Central Sulawesi, Tony said. They will also construct a seaport and roads, including a link from its plant in Soroako to the planned refinery in Bohodopi.

Inco is yet to announce its first-half production results, but Tony said it might have fallen, taking into account first-quarter figures. Inco’s nickel production fell 8 percent to 16,501 tons in the first quarter from a year earlier because of the February earthquake that damaged some of the company’s production facilities.