Chinese firms plan to spend $8.6 billion on Indonesia smelters

Chinese firms plan to invest $8.6 billion on aluminum and iron smelter projects in Indonesia, the industry minister said on Thursday, in a bid to guarantee supplies of metals under threat from a ban on exports of mineral ores from 2014.

Indonesia, a major supplier of metal ores to top consumer China, is trying to drive investment in the metal processing sector by imposing a 20 percent tax on raw ore exports ahead of an outright ban.

China is the largest consumer and producer of aluminum and Indonesia supplied almost 80 percent of the 25 million tonnes of bauxite it bought in the first half of the year. However, imports from Indonesia slumped in June in July, after the tax was imposed.

The planned investment appears to be the biggest to date by Chinese firms in Indonesia's metal processing sector, and if realized, would a success for the government's policy.

"The projects are forward moves in the metal refining industry in Indonesia," Industry Minister Mohamad Hidayat said after a signing ceremony attended by representatives of the three Chinese firms.

Hidayat named the companies as Beijing Shuang Zhong Li Investment Management Co, Ltd, Oriental Mining and Minerals Resources Co Ltd. and Rui Tong Investment Co Ltd.

Oriental Mining is an established steel producer but Chinese industry sources said they were not familiar with the other two companies.