Chinese JV to build stainless steel plant complex in Indonesia

SEATTLE (Scrap Monster): Two Chinese firms have committed to make total investments of US$ 1.63 billion in Indonesia. The investments will be made towards construction of a stainless steel plant and a power plant in Morowali Industrial Area, Central Sulawesi as part of joint venture projects to support development of industrial areas outside Java. The projects are expected to provide big boost to infrastructure development in eastern Indonesia, by reducing the need for imports of steel. In 2016, the country had imported more than 50% of its steel consumption.

The memorandums of understanding (MoUs) to this effect were signed on the sidelines of the China-Indonesia Cooperation Forum: Belt and Road Initiative and Global Maritime Fulcrum held in Beijing on Friday. The announcement of fresh investments in Indonesia follows the bilateral meeting between Indonesian President Joko Widodo and China’s Xi Jinping at the Belt and Road Forum for International Cooperation held last month in Beijing.

The Indonesian Industry Ministry’s director general for metals, machinery, transportation and electronic equipment, I Gusti Putu Suryawirawan stated that Chinese Delong Holdings Limited plans to invest around US $ 980 million to build a stainless steel factory at Morowali. The company will form a joint venture named PT Dexin Steel Indonesia to build the plant with a production capacity of 3.5 million tons. Delong’s subsidiary, Delong Steel Singapore Projects Pte Ltd will own 45% of shares of the joint venture, while 43% will be owned by Shanghai Decent. The remaining 12% will be owned by PT Indonesia Morowali Industrial Park. The plant will manufacture steel bars, wire and slab.

Suryawirawan stated that the 2,000 hectare industrial park is an ideal location for the proposed stainless steel plant, mainly due to the presence of nickel smelter within the park, which can meet the raw material supply requirement of the plant. Morowali would turn out to be the second steel factory complex in Indonesia after Cilegon in Banten, Suryawirawan added. A feasibility study has already been commissioned by WISDRI Engineering and Research in connection with the project, he noted.

In addition, another memorandum of understanding (MoU) was signed among Tsingshan Group and Bintang Delapan Group and PT Indonesia Morowali Industrial Park towards construction of two power plants in Morowali Industrial Area, Central Sulawesi. The plants, with a combined capacity of 700 MW, will be built at a total investment of $650 million.

Meantime, Minister of Industry Airlangga Hartarto appreciated the business to business cooperation between China and Indonesia. He noted that the recent MoUs will help to accelerate development and prosperity in Indonesia. Further, the MoUs will contribute to the deepening of the structure and the enhancement of national industrial competitiveness, he added. Hartarto also disclosed that China Harbour, a part of China Communication Construction Company Ltd (CCCC), has expressed willingness to invest in Kuala Tanjung industrial area and various port projects in the country. Incidentally, Chinese investment in Indonesia’s manufacturing sector has reported tremendous growth since 2014.