Miners Invest $5b in Indonesia Nickel Smelters in First 10 Months

Stockpiles of nickel ore await shipment at a port in a nickel-mining area in Central Sulawesi in this July 8, 2012 file photo. (Reuters Photo/Fergus Jensen)

By : Sarah Yuniarni | on 10:41 AM December 28, 2017
Category : Business, Commodities, Featured

Jakarta. Thirteen mining companies have invested a combined $5.03 billion in the construction of nickel smelters during the first 10 months of this year to comply with Indonesian government requirements, an official at the Ministry of Energy and Mineral Resources said.

President Joko "Jokowi" Widodo issued a government regulation earlier this year to amend several articles in a 2010 mining regulation, which now requires miners to process raw materials within Indonesia before exporting them.

To do this, miners must build smelters to produce value-added products.

"Our new regulation, issued [by the president] this year, contributes to the value-added nickel products and it has had a positive impact on smelter investment this year," Bambang Gatot Aryono, the ministry's director general of coal and minerals, told reporters on Wednesday (27/12).

However, Bambang did not elaborate on the number of smelters that have been built so far.

Processing and Smelting Companies Association (AP3I) data shows that 32 smelters were built between 2012 and 2016 for a total investment of around $20 billion. These smelters process iron, nickel and copper.

Meanwhile, 13 companies have started smelter operations between January and October this year, including state-controlled miner Aneka Tambang and nickel producer Vale Indonesia, the local unit of the Brazilian mining giant.

Bambang said these companies produced about 598,000 tons of ferronickel and nickel pig iron, in addition to 64,000 tons of nickel matte. They produced a combined total of around 34 million tons of nickel ore in the first 10 months of this year.

He added that two nickel smelters operated by local miners Cahaya Modern Metal Industri and Indoferro have ceased operations over the past two years, due to lower nickel prices and the high cost of coke since the end of last year.

Coke contributes around 40 percent of the industry's total production cost.

Indoferro ceased its smelter operations in on July 19, while Cahaya Modern Metal Industri ceased smelter operations in January last year.

Both companies initially produced iron ore, but shifted to nickel in January 2014.

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