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China’s National Development and Reform Commission (NDRC) on Monday gave approval for Jiangsu Province’s Dafeng Port Group Co. to invest in a ferronickel project in Indonesia.
The port operator will partner with local firms Indonesia Salim Group and P.T. Ogasaka on the $560 million project in Kendari, which will include a ferronickel smelter and a 335 megawatt coal-fired power plant, according to company statements.
The smelter is expected to produce 200,000 tons of ferronickel alloys annually with a nickel metal content more than 10 percent when it comes online in 2014. Construction is slated to start by the end of the year.
An employee in Dafeng Port’s overseas investment department declined to give details of the company’s planned investment in the project or how it would be funded when contacted by Interfax.
The move was likely prompted by export restrictions on nickel ore recently introduced in Indonesia, previously China’s largest supplier, Antaike Information analyst Xu Aidong told Interfax.
The Southeast Asian country in May imposed a 20 percent tax on exports of a range of metal ores and limited shipments to companies that plan to build local processing facilities. Exports are set to be halted altogether in 2014.
Located in Jiangsu Province’s Yancheng City, Dafeng Port is also close to downstream users of ferronickel in the steel industry.
While some reports have said output from the Kendari smelter will provide an alternative supply of the material for Indonesia’s stainless steel producers, Xu believes ferronickel alloys from the project will probably sold back to China.