Indonesia and China agreed to invest $1.63 billion in Morowali as part of an effort to support industrial development outside of Java. (Reuters Photo/Yusuf Ahmad)

Tsingshan to Invest $5b in Morowali Carbon Steel Plant

BY :RAHAJENG KH

MARCH 06, 2017

Jakarta. Tsingshan Holding Group, a Chinese steel conglomerate, plans to build a carbon steel factory capable of processing 4 to 5 million tons of the alloy per year at its facility in Central Sulawesi, the Indonesian Minister of Industry Airlangga Hartanto told reporters last week.

The project, which is estimated to cost between $4 billion and $5 billion, will be the group's latest expansion in Indonesia since 2014, when the Southeast Asian nation banned all exports of nickel ore, a mineral used in the production of stainless steel.

"In addition to expanding their existing stainless steel pant, Tsingshan also said it plans to produce carbon steel [in Indonesia]. To that end, the company requested the import of additional industrial equipment," Airlangga announced after a meeting with the Chinese ambassador and the chairman of the Tsingshan Holding Group, Xiang Gangda.

Tsingshan is the cornerstone investor at the Indonesia Morowali Industrial Park (IMIP), based in Central Sulawesi. The company also operates a ferronickel processing plant capable of producing 500,000 tons of the alloy per year through its subsidiary company, Sulawesi Mining Investment (SMI).

SMI's ferronickel nickel content is recorded at 15 percent, bringing the total production of pure nickel to around 75 thousand tons annually. Ferronickel is a raw material found in stainless steel, often used in pipes or common household appliances. Carbon steel, on the other hand, is made of small quantities of carbon and iron and is often found in steel wires.

IMIP, established in 2015 by a consortium of Chinese and local investors, represents Indonesia's most recent effort to extract the highest market value for its raw mineral exports.

Shanghai Decent Investment, an affiliate of Tsingshan Holding Group, owns 66.25 percent of total shares in IMIP, while the Indonesian Bintangdelapan Group controls the remaining 33.75 percent.

The Ministry of Industry projected that the industrial area would attract nearly $6 billion of investments by 2019 and provide more than 100,000 jobs to residents in the surrounding area.

Currently, SMI is constructing a $62 million stainless steel slab factory capable of producing 1 million slabs annually, while IMIP is directing the construction of a 700 megawatt power plant, valued at $500 million.

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