Indo Mines to partner with Chinese firm in RI iron sand project

By Ruli Setiawan

ASX-listed Indo Mines Ltd said on Monday that a Chinese steel maker has expressed interest to become a strategic partner at the former?s iron sand project in Yogyakarta.

?Because of the advanced nature of the Kulon Progo iron sand project in Yogyakarta, Indo Mines management has approached several large Chinese steel producers to assess whether they would participate in developing both the beneficiation and pyro-metallurgical plant. One of the largest steel producers in China has confirmed their interest in development of the iron plant to steel and binding terms are being negotiated on this strategic partnership,? the company said in a statement.

In order to gain an export license, the Indonesian Ministry of Energy and Mineral Resources will still require Indo Mines to prove its advancement of ?value-add? processing. ?The support of this potential strategic partner in developing the iron plant is a key aspect to the success of this application,? Indo Mines said.

It added that the potential strategic partner will assist Indo Mines in applying to the Chinese Central Government to come under the ?One Belt, One Road? foreign economic development initiative that was introduced in October 2013 by Premier Li Keqiang.

Coming under this initiative allows for greater support and advantageous terms/financial backing of the project, but it is also a time consuming process. The potential strategic partner believes development of the beneficiation plant as the first phase of this project development, will greatly improve the iron and steel projects? chances of being approved under the ?One Belt, one Road? initiative.

Indo Mines said the terms of the potential strategic partnership include but not limited to the following;
? EPC of both beneficiation and iron/steel plants
? Design and EPC of loading jetty
? Financing
? Sourcing of equipment
? Off-take for iron sand concentrate
? Technical support
? One Belt, One Road application to Central Chinese Government

In addition to sourcing a potential strategic partner, Indo Mines said it was pleasantly surprised in terms of equipment pricing. The recent downturn in the iron and steel market has had a significant effect on technology and equipment suppliers. Pricing for equipment relevant to developing the beneficiation plant was significantly discounted compared to pricing even 12 months earlier. This will have a substantial positive bearing on the beneficiation plant Capex and therefore IRR, the company said.

During the month of June, the CEO of Indo Mines spent time in China meeting with both equipment suppliers and potential off-takers.

There are three main uses for iron sand concentrate in China;
? Briquettes for furnace refractory repair (utilising Ti02 in the concentrate)
? Low cost source of vanadium alloy
? Low cost source of Fe credits (usually blended in pellets)

Potential off-takers
Indo Mines said it met with potential off-takers primarily focused on utilising the iron sand as a low cost source of Fe credits and were blending the product with high grade fines to produce a pellet. ?Based on initial conversations with these companies there seemed to be a solid market for the product ? but clearly price was the primary factor in terms of their tonnage demand.?

Indo Mines management is currently engaged with these off-takers in negotiating potential terms of trade. Iron sand concentrate samples have been prepared so the potential off-takers can run test work on the iron sand concentrate.

Editing by Reiner Simanjuntak