Chinese ferronickel producer Virtue Dragon Nickel Industry plans to invest USD $5 billion for the establishment of a nickel smelter, power plant and a port. Andrew Zhu, President Director at Virtue Dragon Nickel Industry said that these facilities will be built on a 500-hectares estate in Konawe (Southeast Sulawesi). Zhu said that the nickel smelter development involves three phases. In the first phase, which should be finished by the end of 2015, the smelter will have an annual ferronickel production capacity of 600,000 tons.
In the second phase (2015-2017) the smelter’s production capacity will grow to 1.2 million tons per year. Output of the nickel smelter will be sold domestically and partly exported to China. The third and last phase will see production capacity of the smelter grow to 3 million tons per year by 2019. The smelting facility will be supported by a 335 megawatt (MW) power plant as well as a port.
Imam Haryono, Director General for Regional Industrial Development within the Industry Ministry, said that the government highly supports the establishment of domestic processing facilities (in line with Law No. 4 of 2009 on Minerals and Coal Mining, known as the 'New Mining Law'). This New Mining Law stipulates the prohibition of unprocessed mineral exports from Indonesia (forcing miners to process and refine products domestically first). This ban was implemented in January 2014 and aims to generate more revenue from the country’s mining sector. Moreover, domestic processing facilities will boost employment opportunities in Southeast Asia’s largest economy.
The Industry Ministry targets investment in the domestic manufacturing industry to reach IDR 270 trillion (USD $21.6 billion) in 2015, a 28 percentage point growth from last year’s estimated investment realization in this sector. Investment in the mineral industry is expected to account for most investment in the country’s manufacturing industry this year. The Industry Ministry eyes IDR 382 trillion worth of mineral processing investments (primarily basic metals and steel) in the years ahead. Five companies are set to invest IDR 99.2 trillion for the establishment of copper cathode plants. Eight steel companies plan to invest IDR 52.4 trillion to build steel plants. These companies will produce pig iron, cold rolled coil, and hot dipped galvanized. Five aluminum companies plan to invest IDR 108 trillion and a further eight will invest IDR 123 trillion to produce ferronickel, nickel matte and nickel pig iron.