| JAKARTA/SYDNEY, Sept 4
JAKARTA/SYDNEY, Sept 4 China's Tsingshan Group
expects to start production at its Indonesian nickel pig iron
smelter as soon as January, becoming the second plant to ramp up
since the country's new mineral processing laws came into force
at the start of the year.
"Hopefully by October or November we will have started
commissioning," said Slamet Panggabean, finance manger of
Tsingshan's local joint venture partner Bintang Delapan Mineral,
referring to the firm's pilot smelter project in Morowali on the
Indonesian island of Sulawesi.
"The plan is for production (to begin) in January or
As part of a strategy to reap more value from its mineral
wealth, Indonesia banned ore exports in January as it pushed its
nickel and copper miners to set up metal processing plants. The
move has driven up London Metal Exchange nickel prices
by a third so far this year.
Stocks of nickel pig iron at China's stainless steel makers
are running down, leaving them exposed to a supply gap next year
and fuelling the need to build smelters in Indonesia as quickly
Tsingshan, China's second largest stainless steel company,
was one of the few firms to act when the law was enacted in 2009
and is well ahead of other nickel pig iron producers, many of
which held back on hopes the ban would be rolled back.
Output at the joint venture, Sulawesi Mining Investment, is
expected to ramp up slowly and is unlikely to reach name plate
capacity of 300,000 tonnes of nickel pig iron in the first year
The group is currently preparing foundations for the planned
second phase of the project, he added. This would add a further
600,000 tonnes of output capacity to the facility, which was
partly funded by a $384 million loan from China's policy lender
State Development Bank.
Some production could even start as early as October, two
sources told Reuters.
"(They) already tested the facilities in last month, so I
think production in October is possible," said one of the
sources who is familiar with the operations but is not
authorised to talk to the media.
Rival producer, PT Cahaya Modern Metal Industri, began
output at the end of 2013 and has already begun exports to
China, a source with knowledge of the operations said.
Another producer, PT Indoferro, which began NPI production
in 2012, is on track to finish an expansion project by the end
of 2015 that would lift output to 12,000 tonnes of nickel in pig
iron from 8,000 tonnes annually at the moment, an company
Vale Indonesia processes all of its nickel ore at
its four smelters in South Sulawesi, which have a capacity of
more than 70,000 tonnes while Indonesia's second-biggest nickel
producer, PT Aneka Tambang (Antam) exports from its
three ferronickel smelters.
China's stainless steel makers have largely turned to lower
grade Filipino ore, which they are blending with their stocks in
order to make them last. This week a Philippine senator urged
the country to halt exports of unprocessed mineral
(Additional reporting by Fergus Jensen in JAKARTA; Reporting by