Indonesia’s upcoming ban on mineral exports is drawing a wave of Chinese investors but for some it may already be too late to jump on the bandwagon.
JAKARTA (AUSTRALIAN MINING) – Indonesia’s upcoming ban on mineral exports is drawing a wave of Chinese investors and equipment suppliers as local miners are forced to beef up ore processing capability before a 2014 deadline.
The wave may be one of the few bright spots for aspiring Chinese suppliers, many of whom are venturing out of their home markets for the first time, in bid to offset a construction and investment downturn in their home market.
One small example? Tonghua Jianxin Metalurgy Co. The company based in Jilin province, opened its first office outside of China in Jakarta this month, after sealing only its second overseas contract to design, build and commission a nickel ore smelter in July.
The company will build a smelter capable of processing 50 tons of nickel ore a day for Bukaka Forging Industries, whose specialty products include automotive parts and passenger air bridges at Indonesia’s airports.
The facility will be up and running 14 months from receiving its down payment it’s representative here says.
“The opportunities are enormous here,” says Kidang Omar, an Indonesian native who heads the company’s office in Jakarta.
“With so much ore volume you can imagine how many many processing factories Indonesia will need
With a quarter of its nickel ore coming from Indonesia, Chinese customers are keen to shore up supplies of the metal as the government curbs export of unprocessed metals.
Chinese imports of Indonesian nickel ore slumped to just under 1.5 million tonnes in August from 4 million tonnes in June after the government announced the export ban.
But in recent months three Chinese firms said they will invest nearly $9 billion in Indonesian smelters.
Oriental Mining and Minerals Resources and Rui Tong Investment will invest $1.5 billion in direct reduced iron plants with a capacity of 6 million tons, Industry minister Mohamad Hidayat has said.
Beijing Shuangzhongli Investment Management will invest $7.1 billion in alumina refining plants with a production capacity of 1.8 million tons.
State owned Aluminum Corporation of China, or Chalco, signed a deal last month with Indonesia’s Indonusa Dwitama to develop a refinery for bauxite, the raw material for aluminium.
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