Ibris Group plans $1.8 bln Indonesian nickel smelter – by Fergus Jensen (Reuters U.S. – June 19, 2013)


JAKARTA – (Reuters) – Ibris Group, a Singapore-based miner, announced plans to build a $1.8 billion nickel pig iron plant in Sulawesi, the latest in a series of smelter projects after Indonesia began tightening controls on ore exports.

Indonesia, the world’s top nickel ore exporter, has been pushing for greater returns from its resource wealth. In 2009, it imposed a ban on unprocessed ore exports after January 2014.

The government, which has faced widespread criticism from miners and metal importers over the rules, has indicated it may relax the ore export ban for companies with smelter projects, however.

Singapore-based Ibris, which expects to export around 3 million tonnes of nickel ore this year, triple its 2011 level, plans to build the Rotary Kiln Electric Furnace smelter in two stages, with a total budget of around $1.8 billion.

“We will draw on our own funds as well as external investment. We have agreed with a consortium of financial investors to take a share of the project finance,” Ibris Group Chief Executive Arwan Ahimsa told reporters in Jakarta. Ibris would hold a 51 percent stake in the project.

“We have the engineering and basic design, and we are adjusting this to suit the site conditions, infrastructure requirements and support material,” Ahimsa said.

On Wednesday, Ibris signed a memorandum of understanding with China’s Yong-Xing Alloy Material Technology Taizhou Co. Ltd., which will invest in the project.

In the first pilot stage, the development of two modules is expected to be completed in eight months, Yong-Xing Alloy Materials General Manager Yizheng Zong said.

The project is the first investment Yong-Xing has made outside China, Zong said, adding that Yong-Xing would also take some of its production. China consumes around 27 million tonnes of nickel pig iron a year, Zong said.

If the pilot stage is successful, the companies plan to roll out 38 more modules, which could take up to four years to complete.

The full project is expected to produce 600,000 tonnes of nickel pig iron a year with a nickel content of around 8 percent. The plant is expected to process 6 million to 8 million tonnes of nickel ore per year, some of which the company plans to obtain from other miners in the area.

Much of Indonesia’s mining industry has been hoping for a relaxation in the 2014 ban and of the 20 percent tax on ore exports, Ibris Nickel Chief Operating Officer Agus Suhartono said.

“At this stage I think all miners, including Freeport, Newmont and others, are waiting for this … We’re running out of steam because of the tight rules,” Suhartono said, referring to Indonesian units of Freeport McMoRan Copper & Gold Inc and Newmont Mining Corp.

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