Investment in downstream mining industry may reach US$10.8b

Indonesia may realize up to US$10.8 billion of new investments in downstream mining industries within the next few years, such as in the processing of bauxite, nickel and iron ores, Investor Daily reported on Friday.

Minister of Industry MS Hidayat said investments in the downstream mining industries would increase sharply in the next few years in line with the government?s policy to prohibit mining companies from exporting their raw mineral products.

According to the new minerals and coal law, all mining companies are obliged to process their mining products in the country by no later than 2014. The law aims to promote the development of industries producing mining derivative products.

Minister Hidayat said that the government would impose export tax on exports of raw mineral products next month before the government?s ban becoming effective in 2014. ?The regulation of the export tax is currently being drafted,? he added.

According to him, the government?s policy to ban raw mineral products and the introduction of the export tax will encourage miners to build smelting plants in the country. The country?s bauxite production which has reached 15 million tons a year will for example need several alumina plants.

To build an alumina processing plant with a capacity of 7 million tons a year will cost about $8.4 billion. ?The alumina needs of PT Inalum of about 500,000 a year can be provided from the domestic market,? he said.

Indonesia will also need more copper smelting plants to process copper concentrate into copper cathode. The country will need at least a copper smelter with a capacity of 425,000 tons a year to process the copper concentrate. This will require investment of about $1.4 billion.

Indonesia will also need to build a sponge/pig iron smelting plant with a capacity of at least 5 million tons a year to process iron ore. This will require investment of about $1 billion, he added. (*)