Chinese Firms to Invest $8.6 Billion in Indonesian Smelters

Aug. 30, 2012
Three Chinese firms will invest up to $8.6 billion in Indonesian smelters, as a ban on the export of raw minerals from Southeast Asia's biggest nation looms.

Three Chinese firms will invest up to $8.6 billion in Indonesian smelters, Jakarta's industry minister said Thursday, as a ban on the export of raw minerals from Southeast Asia's biggest nation looms.

"Oriental Mining and Minerals Resources and Rui Tong Investment will invest $1.5 billion in direct-reduced iron plants with a capacity of 6 million tons," state-run news agency Antara reported Mohamad Hidayat as saying.

"Beijing Shuangzhongli Investment Management will invest $7.1 billion in alumina-refining plants with a production capacity of 1.8 million tons," the minister added.

The investment comes after a string of similar deals as China deepens its presence in Indonesia before the resource-rich nation implements a blanket ban on ore exports, slated for 2014.

Indonesia has in the past year tightened protectionist policies in the mining sector, obliging foreigners with new mining permits to divest a controlling stake in assets after 10 years of production.

It also imposed a 20% tax on raw-mineral exports, and obliged ore exporters to invest in Indonesian smelters.

Hidayat said the $8.6 billion investment will create 46,000 new jobs for Indonesians.

A subsidiary of the government-backed Aluminum Corp. of China, or Chalco, this week signed a deal with Indonesia's Indonusa Dwitama to develop a refinery for bauxite, the raw material for aluminium.

Earlier this month, Bosai Minerals Group, China's largest bauxite producer, announced a $1 billion investment to build a similar plant in Indonesia.

Copyright Agence France-Presse, 2012

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