(Minews) - Indonesia forecasts that nine nickel-processing plants may be completed this year after the largest mined producer banned raw ore exports in January, spurring a rally in refined prices to the highest level since 2012.
The plants comprise two ferronickel and seven nickel-pig-iron smelters, according to data from the Energy and Mineral Resources Ministry. One chemical-grade alumina plant is also scheduled to be completed this year, the data showed.
Southeast Asia’s largest economy is seeking to force a move toward processed commodities, betting that repercussions from the ban such as job losses will be offset by investment in new plants and output of higher-value products. The metal used in stainless steel is the biggest gainer this year among the six main metals traded on the London Metal Exchange amid concern that the ban will raise costs and spur a global deficit.
“Greenfield smelters are horribly expensive and drag down the profitability of even the best ore-mining operations,” said Xavier Jean, a credit analyst at Standard & Poor’s in Singapore. The prospects for completions this year are unrealistic, Jean said in an interview.
As many as 63 smelters may be built by 2017, including 40 nickel plants, 10 iron ore smelters and four copper-cathode smelters, according to the ministry’s data, which was presented at a seminar in Jakarta on April 30.
Construction work at 30 companies may be 80 percent to 100 percent complete this year, mostly for nickel and some iron projects, R. Sukhyar, director general of coal and minerals at the Energy and Mineral Resources Ministry, said on May 7.
