Central Omega Resources, a mineral trading company, plans to build a nickel smelter in Indonesia at an estimated cost of $300 million. The plant is expected to have an annual capacity of 200,000 tons. Construction will begin in 2014.
Ciho Darmawan, Omega’s director of operations, said the plant would be built in stages. In 2014, its expected output will be 100,000 tons; by 2015, expected output will increase by another 100,000 tons to reach full capacity.
Ciho said the company would get nickel ore, the raw material for the smelter, from its nickel mines in Central and Southeast Sulawesi. The company is seeking strategic investors to set a up a joint venture to build the smelter, as well as a bank loan to finance it.
Central Omega said it was looking at possible locations in Sulawesi and Java for the smelter, though no specific locations were mentioned.
Under the 2009 Mining Law, mining companies are required to process all raw materials domestically by 2014 or have their mining licenses revoked and shipping activities suspended.
In a sign that it intends to stand by the controversial plan despite criticism, the government imposed a 20 percent export tax on 65 raw materials and minerals in May, claiming that raw material exports had grown “uncontrollably” since the 2009 law was introduced.
Central Omega has negotiated an agreement with state utility company Perusahaan Listrik Negara over the supply of electricity for its planned ferronickel smelter. Under the deal PLN will provide the company with a special rate that will have to be agreed upon by both sides. Central Omega is a mineral trading company that is 80 percent controlled by China’s Jinsheng Mining.
Shares of Central Omega, trading under the symbol DKFT, fell 5.6 percent to Rp 340 on the Indonesia Stock Exchange on Wednesday.