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erronickel maker PT Macika Mineral Industri, a subsidiary of privately owned mining company PT Macika Mada Madana, is scheduled to begin construction of its first ferronickel smelter this month in Southeast Sulawesi, says an executive from the company.

The company's president director, Alexander PH Roemokov, said in Jakarta Friday that the company would invest about US$15 million to build the smelter, which would have the capacity to produce 18,000 tons of ferronickel.

He said that the smelter would be built and operated in cooperation with China-based mining company Ningbo Brillimetal Co. Ltd., which would a have a 50 percent stake in the smelter.

Macika expected that construction of its first smelter would be completed in the first quarter of next year, Alexander said. 'We hope construction will be finished in February next year,' he added.

The smelter complex will occupy 45 hectares in South Konawe regency. The nickel ore will be supplied by a number of nickel mining companies in the area.

Alexander said that operation of the smelting plant would not only help small-scale nickel mining companies process their ores but also create jobs for the local community. 'Our first ferronickel smelter is expected to provide jobs for about 450 people,' said Alexander, adding that the ferronickel would be exported to China.

'There is no demand for ferronickel in the country yet. So we will export it all to China,' Alexander said.

When construction of its first ferronickel smelter is completed next year, Macika will begin construction of two new smelters in Konawe. The two new ferronickel smelters would provide an additional production capacity of 36,000 tons, said Alexander.

'When the three ferronickel smelters start operating, they will be able to produce 54,000 tons per year,' said Alexander, adding that total investment in the three ferronickel smelters was around $40 million.

Construction of two new ferronickel smelters would commence in the second quarter of next year, said Alexander.

'We expect the two new ferronickel smelters to start operating in 2017,' said Alexander.

Indonesia, the world's largest copper and nickel ore producer, imposed a ban raw mineral ore exports in January. Mining firms must process ores locally to provide added value from the country's mining sector.

The Indonesian Resources Studies (IRESS) previously reported that the government's program to push the downstream industry in the mining sector would give the country more revenue from processed mineral exports, in addition to boosting job creation.

The country generated around $1.9 billion from exporting 55 million tons of nickel ores in 2013, up from 32 million tons in 2011 and 41 million tons in 2012, according to the IRESS' report.

If those nickel ore were exported in the form of ferronickel, the earnings would have amounted to $9 billion, IRESS said in its study. 'We have been losing a huge amount of potential income for years by exporting raw minerals,' said
IRESS' executive director Marwan Batubara. (alz)