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Russian firms plan to invest billions of dollars in refineries, smelters and infrastructure, including railways and power plants, in Indonesia within the next few years, an ambassador says.
Russian Ambassador to Indonesia Alexander A. Ivanov said on Wednesday that the investments would come from, among others, state railway firm Joint Stock Company (JSC) Russian Railways, Norilsk Nickel — one of the world’s largest nickel, platinum and copper producers — and Russia’s leading aluminum producer, Russky Aluminiy.
“There are very broad potentials [for investment]. But, the companies are still in the initial stages and they have not applied to the BKPM [Investment Coordinating Board] yet,” he told reporters during a press briefing on the ongoing Asia-Pacific Economic Cooperation (APEC), hosted by Russia in Vladivostok.
Russian Railways plans to build a railway line in East Kalimantan to support coal delivery with an anticipated investment of US$2.4 billion in 2013, with operations set to begin in 2017.
The firm already signed a memorandum of understanding with the local administration in February this year and is still completing the feasibility study on the railway project.
Norilsk Nickel was looking at possibilities to build a copper smelter, and a non-ferrous metal smelter, with investment of up to $2 billion, Ivanov said.
Russky Aluminiy was considering setting up a refinery of bauxite or other non-ferrous metals, and supporting infrastructure such as power plants, with a local partners, Ivanov added.
A few years ago, the firm expressed an interest to cooperate in the construction of a bauxite refinery to produce alumina, the material to make aluminum, with state-owned mining company PT Aneka Tambang (Antam).
Investment in the Tayan, West Kalimantan facility is estimated to reach $1 billion, according to local media reports.
Antam corporate secretary Tedi Badrujaman declined to respond to The Jakarta Post’s question over the progress of the plans and the possibility of future cooperation with the Russian firm.
Ivanov further said that with such sizeable potential investments, Russia expected to boost bilateral trade with Indonesia, which both countries had targeted to top $5 billion in 2014.
At present, Russian investment in Indonesia are relatively small as a number of investments are channeled through other countries, such as Singapore and Mauritius. Through the first half of this year, realized investment from Russia only reached $300 million from three projects.
In contrast to investment, bilateral trade grew faster, up by 48.78 percent in the January-June period this year to $1.68 billion from last year.
Indonesia exported commodities, such as palm oil, cacao, vanilla and tea, and manufactured goods, including furniture and footwear to Russia, while importing aircraft, military equipment and telecommunication tools.
Earlier last year, the BKPM said that Indonesia expected investment to total at least $6 billion following the visit of a Russian delegation last October, including from a unit of Russia’s Solway Industries, which planned to build a nickel smelter in Halmahera, North Maluku.
Indonesia, one of the world’s biggest suppliers of raw minerals, has imposed a 20 percent export tax on 65 types of mineral commodities, and will completely ban raw mineral exports in 2014 to spur the development of local refineries and smelters.