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T Bosowa Metal Industri, a subsidiary of diversified business group Bosowa Corporation, has secured supplies from state-owned electricity company PT PLN for its nickel smelter to be built in Jeneponto, South Sulawesi.

Bosowa Metal Industri and PLN signed on Thursday a memorandum of understanding (MOU) for an electricity supply of 70 megawatts. The MOU will be followed by technical talks concerning quality, contract term and price, PLN planning and risk, said management director Murtaqi Syamsuddin.

“We hope to have a signed cooperation agreement within two months. This is a long-term cooperation, which should last more than 10 years,” Murtaqi said.

“The [Bosowa] smelter will be the largest to be supplied by PLN in the eastern part of Indonesia. So far, companies building nickel smelters, such as Antam (PT Aneka Tambang Tbk) and Vale (PT Vale Indonesia Tbk), establish their own power-supplier infrastructure,” Murtaqi said.

PLN will start supplying electricity when the smelter construction is finished in early 2014.

“We are still working with the engineering design of the smelter. We hope to start construction in August, after which it will take about two years to finish. The total investment for the smelter is US$200 million,” Bosowa Corporation CEO Erwin Aksa said.

Bosowa Metal Industri has designed the smelter, which will be built on 50 hectares of land in Jeneponto, to produce up to 10,000 tons of nickel per year.

“The smelter is aimed to anticipate the full implementation of the ban on exports of unprocessed mineral ores in 2014. It’s also possible that we will accept nickel ore from other miners that have no smelter and cannot export due to the regulation,” Erwin said, adding that his company’s processed nickel would be exported to major markets, such as China, Korea, Japan and European countries.

“Our smelter will process nickel ore produced from our mining areas in Konawe and North Konawe [Southeast Sulawesi] that have mineable reserves of 100 million tons over 30 years. We decided to build the smelter far from the mining areas in Southeast Sulawesi because stronger infrastructure facilities are available in Jeneponto, South Sulawesi,” Erwin said.

PLN was developing an electricity system in South Sulawesi, which would have a total supply capacity of more than 1,000 megawatts, Murtaqi said.

“With Bosowa’s smelter, we are ensuring that the capacity will be absorbed. PLN is ready to supply electricity for more smelting activities in South Sulawesi and also in East Java,” Murtaqi said.

Bosowa Corporation, through its subsidiary PT Bosowa Energy, is developing coal-fired power plants in Jeneponto as part of establishing an integrated industrial zone, according to Erwin. However, the power plants cannot provide energy for smelting activities.

Bosowa Energy is constructing a power plant in Jeneponto, which will have a 2x125 megawatts capacity with investment reaching $250 million.