Chinese firms to spend $1.6b on alumina smelter, industrial park

Chinese investors are planning to build an aluminium plant in West Kalimantan and also an industrial park in West Java, which would have a total investment of around US$1.6 billion, said a minister.

On Friday, MS Hidayat, the Industry Minister said Chinese firms were looking for local partners to build jointly and operate the aluminium smelter.

“They may source raw materials from the eastern part of Indonesia,” he told reporters after meeting officials from China’s Guangxi Zhuang Autonomous Region.

Hidayat added, the Chinese investors were also preparing for the construction of the industrial park, set to be located in a 1,000 hectare area in Bekasi, near Jakarta.

Indonesia has become a destination for major investment for the Chinese companies.

In the last two years, Indonesia has seen a strong flow of direct investment from China. All thanks to a new commitment from the Chinese economy for improving its economic relations, which were previously dominated by trade.

During a meeting between Xi Jinping, Chinese President and President Susilo Bambang Yudhoyono in last year October, a number of Chinese firms had showed their interest in investing more than $30 billion in a variety of sectors ranging from infrastructure to mining.

Earlier this week, several Chinese firms revealed plans to spend up to $5 billion to develop an industrial park in Bantaeng regency, South Sulawesi, which is set to serve as Indonesia’s first integrated iron-and-steel industrial park.

China’s second-biggest aluminum producer Shandong Nanshan Aluminium Co. Ltd. recently began the construction of its processing facilities and supporting infrastructure, totaling $5 billion in Bintan Island, Riau Islands province. The facility will be capable of producing 2.1 million tons of alumina and 570,000 tons of aluminum ingots each year.

A portion of the total output will be exported to several countries, including China, Japan and the US, while the rest will be allotted domestically.

Guangxi People’s Government Office deputy secretary general Wei Ren said the alumina project in West Kalimantan could commence in the next two or three years by a consortium of Chinese firms, particularly from the Guangxi region.

“At present, we are carrying out a feasibility study on the project,” he said, adding that the investors were now seeking some local partners to take part in the project.

Apart from building the smelter, the consortium would also construct a seaport and power plant to shoulder operational activities there, Wei further said.

Wei also said the planned industrial park would serve as a basis for manufacturing, such as electronics and auto parts, and would be equipped with a logistical center to maintain a supply of raw materials necessary for the industry.

“We’re trying to attract investment from China and other parts of the world, Wei said.

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