Indonesia says Fortescue, China's Tsingshan in talks for Borneo investment

JAKARTA (Reuters) - Indonesia is in talks with China’s Tsingshan Holding Group and Australia’s Fortescue Metals Group to build a new industrial estate for metal smelting near a planned hydropower plant on Borneo island, a minister said on Tuesday.

FILE PHOTO: Indonesia's Chief Security Minister Luhut Pandjaitan speaks during a morning briefing with journalists at his office in Jakarta, Indonesia July 20, 2016. REUTERS/Darren Whiteside/File Photo

The new estate will be located near the 11,000 megawatt Kayan hydropower project in North Kalimantan province, according to Luhut Pandjaitan, Indonesia’s coordinating minister for maritime affairs and investment, who also oversees mining regulations.

“We’re discussing already with Fortescue from Australia and Tsingshan from China to build an industrial estate over there,” Luhut told a forum of policymakers, businesses and economists, referring to North Kalimantan.

“So then by 2023, this area, this integrated industry is starting to (do) smelting ... for iron ore, nickel ore and copper,” he said.

He added this development should go in parallel with Indonesia’s project to produce lithium batteries using its nickel reserves.

Tsingshan, China’s stainless steel giant, is also a major player in the Southeast Asian country’s nickel downstreaming ambitions.

In September, a Fortescue’s subsidiary, Fortescue Future Industries (FFI), signed an agreement with Indonesia’s government to conduct feasibility studies into the utilisation of the country’s hydropower and geothermal resources for industrial operations, for potential domestic supply and exports, FFI’s chief executive Julie Shuttleworth said in an email.

Tsingshan did not immediately respond to a request for comment.

Construction of the Kayan power plant, which is being developed by Power Construction Corp of China (PowerChina) and Indonesia’s Kayan Hydro Energy, should begin this year with completion of the first phase projected by 2025, according to local media reports.

Luhut said Indonesia’s next aim is to produce hydrogen fuel at the Kayan plant.

Reporting by Gayatri Suroyo; Additional reporting by Tom Daly; Editing by Martin Petty and Ed Davies