S

ulawesi Mining Investment, a joint Indonesia-China venture, aims to kick off the second phase of its smelter construction project in the second quarter of this year with a price tag of around US$1.04 billion.

Sulawesi Mining deputy president director Alexander Barus said Tuesday that the company planned to start in May or June and expected to complete it sometime before 2018.

Once the project is finished it will help increase the capacity of its smelter by 600,000 tons of ferronickel a year, adding to the 300,000 tons capacity expected from the first smelter, which is currently still under construction in the first stage project.

'€œWe will involve other investors because we need a sizeable investment for the second phase project. Some investors have expressed an interest,'€ he told reporters after a meeting with Industry Minister MS Hidayat at his office.

In the second phase of the project, the firm also plans to build a coal-fired power plant to generate 300 megawatts (MW) of electricity.

Sulawesi Mining, owned by local business entity, Bintang Delapan Group, and China'€™s Tsingshan Holding Group is currently developing nickel smelter supporting infrastructure in Morowali, Central Sulawesi, which will cost around $1.9 billion and run in two stages until the scheduled finalization in 2018. The first stage needed $722.30 million in investment.

The construction of the smelter by Sulawesi Mining follows a government regulation that banned exports of unprocessed mineral ore starting from mid-January this year. The policy aimed to spur growth in the downstream industry and allow the country to benefit more from its abundant natural resources.

Barus said that at present, the construction of the first smelter was still on track to meet its operational schedule of mid-2015.

'€œThe construction is between 40 percent and 45 percent complete, while we have almost finished the procurement process for the smelter,'€ he said.

Once the first smelter is finished, it will produce 300,000 tons of ferro nickel annually, all of which will be exported.

To meet the smelter'€™s energy needs, the firm is also constructing a 2x65 MW coal-fired power generator at the site.

Barus said that the smelter would source nickel ore from PT Bintang Delapan Mineral, a subsidiary of Bintang Delapan, which secured a mining permit for a 47,000-hectare area in Morowali.

In the initial phase of the smelter'€™s operation, it would need around 3 million tons of nickel ore and when the smelter reached its full capacity it would absorb roughly 9 million tons per year to generate a total 900,000 tons of ferro nickel, he added.

The whole output is slated for domestic use to supply a planned stainless steel mill by Shanghai Decent Investment Co. Ltd., a Chinese-firm. The mill is designed to have a capacity of 2 million tons per year, according to Barus.

The smelter and the steel mill will be part of an integrated industrial estate '€” Indonesia Morowali Industrial Park '€” set to be developed in Morowali under the cooperation of Bintang Delapan and
Tsingshan Group. The industrial park, to be supported by, among others, a seaport and an airport, may accommodate approximately 100 firms.