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ickel miner PT Huadi Nickel-Alloy Indonesia plans to kick off operation of a smelter in Bantaeng, South Sulawesi, which is slated to be the area'€™s first nickel-processing facility.

The smelter, which may cost a total US$130 million by the final phase of development, will initially produce 50,000 tons of ferronickel each year, according to Huadi Nickel director Jos Stefan Hideky.

'€œTo support our operation, we will source the raw material '€” nickel ore '€” from our own mine in Southeast Sulawesi,'€ he told The Jakarta Post on Wednesday after signing a power purchase agreement with power firm PT Bantaeng Sigma Energi on Wednesday.

The smelter'€™s output would be sent to the firm'€™s affiliate in China, Jos revealed.

Huadi Nickel is a joint venture between Shanghai Huadi Industrial Co. of China and local firm PT Duta Nikel Sulawesi. Huadi'€™s Chinese affiliate supplies stainless steel for multinationals like aircraft maker Boeing and automobile producer General Motors.

The advance phase of the smelter'€™s development will be continued in 2017 and 2019 until the facility reaches its full production capacity, according to the firm'€™s plan.

Huadi'€™s smelter is part of overall investment totaling up to Rp40 trillion ($3.17 billion) that Bantaeng Regency will receive in the next few years for nickel-processing facilities and supporting infrastructure, such as power plants, seaports and water treatment installations, according to Bantaeng regent Nurdin Abdullah.

The smelter is set to occupy an area of 1,000 hectares in a 3,000- hectare plot provided by the local administration for the establishment of Bantaeng Industrial Park, planned to become Indonesia'€™s first integrated iron-and-steel industrial estate.

Indonesia, a major supplier of minerals including nickel and bauxite, has benefited from the government'€™s outright ban on exports of mineral ore and requirement for miners to process domestically since the beginning of 2014, seeing inflows of billions of dollars into mineral-processing facilities.

In the agreement signed on Tuesday, PT Bantaeng Sigma Energi will provide electricity for smelters to four firms '€” PT Huadi Nickel, PT Titan Mineral Utama, PT Zhongning Mining Metallurgy and PT Mitra Tambang Selaras, as well as energy-resource supplier PT Mitra Selaras Sukses Sejahtera. The firm is constructing a 2x300 megawatt coal-fired plant in the new industrial center.

Following Huadi'€™s step, another firm '€” Chinese firm Zhongning Mining '€” said that it would in the near future commence construction of a smelter in the same area.

'€œWe have already cleared the land and may start very soon. The equipment will be installed by the end of the year,'€ said Zhongning Mining director Emir Yusuf.

The planned smelter would annually produce 120,000 tons of nickel pig iron at the initial stage of operation before reaching 600,000 tons when, after a few years, development was complete, he added.

The firm will obtain the raw material from a number of mines in Southeast Sulawesi, while the smelter'€™s output will be exported to buyers in China.