Local miner Bumi Makmur Selaras Group Indonesia and Chinese metal miner Hanking Group are set to start operating their $500 million ferro-nickel smelting plant in Sulawesi next year, to comply with a government requirement to process mining product domestically.
Tadjudin Hidajat, the BMS president director, said the company and its Chinese partner had invested $150 million by the end of June. He said the processing plant is projected to be complete by December and to start commercial operations next May.
“The smelter was built in response to the ban on export of raw minerals that will be imposed by the government in 2014,” he said after a meeting with Industry Minister M.S. Hidayat last week.
The 2009 Mining Law states that mining outfits operating in the country must submit plans to process raw minerals such as aluminium and copper domestically before 2014. The government will ban the export of raw minerals after 2014 for mining outfits without such plans. In its early stage the Sulawesi smelter’s production capacity will reach 20,000 tons per year and be increased incrementally to 60,000 tons per year.
Established in 2002, BMS holds several nickel mining concessions in eastern Indonesia, including in Southeast Sulawesi and North Maluku provinces. The mine in Southeast Sulawesi is still in the preproduction phase, while North Maluku is already active.
Tadjudin said the smelter’s proximity to the company’s mines meant it was more economical for the company to produce ferro-nickel, an alloy of iron and nickel used in steel making.
The smelter will export all its products, Tadjudin said, but BMS is ready to supply domestic markets should the price be favorable.
Hidayat said the BMS-Hanking cooperation is the result of discussions between governments over recent years.
“They reported the development of the investment and invited government [agencies] to attend trial production later this year,” Hidayat said.
Panggah Susanto, manufacturing director general at the Industry Ministry, said the BMS and Hanking investment was proof mineral-based downstream facilities could be realized. This is in line with the government’s road map for domestic metal processing development, he said.
Apart from the Sulawesi smelting plants, BMS also plans to develop an industrial zone with state-owned enterprise China Resources Holdings in Southeast Sulawesi, equipped with power plants, cement factories and steel plants.
“We’ve got the land and they are interested in investing in Indonesia. Therefore, we invite them to look at conditions on the ground,” Tadjudin said.
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