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Jakarta. A Chinese ferronickel producer, Virtue Dragon Nickel Industry, plans to invest up to $5 billion in Konawe industrial estate in Southeast Sulawesi province to build a nickel smelter and supporting infrastructure including a power plant and a port, its president director said on Friday.
Speaking to reporters at the Industry Ministry’s headquarters in Jakarta, Andrew Zhu, president director of the Chinese company, said the smelter is set to occupy a total of 500 hectares.
Zhu elaborated that the smelter development would involve three phases. First, it will develop a smelter with a maximum production capacity of 600,000 tons per year on an area of 100 hectares. This phase is expected to be completed by the end of this year.
In the second phase, Virtue Dragon will expand its land area to 200 hectares and double the production capacity to 1.2 million tons per year. This phase is scheduled to be completed by the end of 2017.
Lastly, it will expand the land area to 500 hectares and ramp production to 3 million tons per year. This phase is expected to be concluded in 2019. Zhu said the ferronickel produced will be sold to both Indonesia and China. Meanwhile Zhu said the smelter would be supported by a 335 megawatt power plant and a port.
He didn’t elaborate on the power plant’s fuel type and the specifications for the port.
Imam Haryono, the director general for industrial region development at the industry ministry said Konawe Industrial Estate is one of 13 the government sets to prioritize for development.
“We hope not only a ferronickel smelter [will be built at Konawe Industrial Estate], but that it could also have a stainless steel [plant],” he said.
Konawe Industrial Estate covers about 5,500 hectares in the province. Southeast Sulawesi is rich in minerals such as nickel and bauxite.
The Industry Ministry is targeting total investment in the manufacturing industry of Rp 270 trillion ($21 billion) this year, or up 28 percent from 2014’s estimate of Rp 210 trillion.
Investment from the mineral sector is expected to drive manufacturing industry growth.
The ministry’s data showed investors have made investment commitments up to Rp 382 trillion in Indonesia’s basic metal and steel sector starting from 2015.
The data shows that five companies are ready to invest up to Rp 99.2 trillion to build copper cathode plants and a further eight in the steel plants.
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