Chinese, Indonesian Companies sign deals to build a bauxite and aluminium processing plant

Chinese President Xi Jinping brought a passel of investment deals with him on his visit to Indonesia, with companies from the two countries signing agreements valued at $28.2 billion on projects ranging from commodity production and processing to railway infrastructure and an aircraft financing deal.

If the deals proceed, they would help Indonesia to reverse a slowdown in foreign direct investment seen in the second quarter reflecting reluctance among investors about committing to projects in a country that is seen as having an unpredictable regulatory environment. Chinese companies have announced multibillion-dollar investments in Indonesia before but haven't followed through.

Indonesian Industry Minister Mohamad Hidayat said in a speech to announce the deals on Thursday said that all of them were "selected" based on readiness to be carried out to completion, with construction for many likely to start next year.

"I believe Chinese companies could become our main partners to develop various projects in Indonesia in the future," Indonesian President Susilo Bambang Yudhoyono said as he and Mr. Xi witnessed the agreements being signed.

Among the 21 agreements signed, a few are for the direct processing of mineral ores, a sector in need of some investment given that the Indonesian government has set a timetable that would see exports of raw ores banned next year. The country announced the ban last year, saying the lead time would give companies the opportunity to beef up processing capacity.

China Development Bank, Shanghai Decent Investment and China-Asean Investment Cooperation Fund signed a $5.1 billion agreement with PT Bintang Delapan to build a ferronickel plant with annual capacity of 300,000 tons in Sulawesi. China Hongqiao Group Ltd. and Winning Investment (HK) Company Ltd. signed a $1-billion joint-venture deal with PT Citra Mineral Investindo to build an aluminium processing plant, while Hangzou Jinjiang Group and PT Borneo Alumindo will invest $1.7 billion to build a bauxite and aluminium processing plant with total capacity of 1.5 million tons a year.