Indonesia's Vale, China Firm Sign $2bn Nickel Plant Deal

An Indonesian nickel miner signed a big investment deal on Tuesday with China’s Shandong Xinhai Technology to build a processing plant on Sulawesi Island.

PT Vale Indonesia‘s chief executive Febriany Eddy said the project, in Bahodopi in Morowali district, would cost around $2.1 billion.

“With this signing we can proceed and accelerate construction work in the field so it can be completed by 2025 at the latest,” she said during the deal signing ceremony.

Shandong Xinhai Technology is a unit of China Baowu Steel Group.

Under the deal, the companies will form a joint venture firm, with Vale controlling 49% of the stake. Shandong Xinhai and Baowu, through its subsidiary Taiyuan Iron & Steel Co Ltd (Tisco), would together control 51%, Vale’s chief finance officer Bernardus Irmanto told reporters.

The Bahodopi project will produce ferro-nickel with 73,000 tonnes to 80,000 tonnes of nickel content per year, he said, noting the partners were also discussing the possibility of adding a stainless steel plant later on.

Wang Wenlong, the chairman of Shandong Xinhai, said at the signing ceremony the Bahodopi project would be the first nickel plant in Indonesia to be powered with liquefied natural gas.

In Pomalaa, another area on Sulawesi island, Vale and its partners are developing a plant to produce 120,000 tonnes per annum of mixed hydroxide precipitate, material extracted from nickel ore that would be used in batteries for electric vehicles.

Fuel Hike Opposed

Meanwhile, in other Indonesian news, thousands of people rallied in the country’s biggest cities on Tuesday, demanding the government reverse its first subsidised fuel price increase in eight years amid soaring inflation.

Under pressure to control a ballooning energy subsidy budget, President Joko Widodo said on Saturday he had little choice but to cut the subsidy and let fuel prices rise by about 30% in the country of 270 million people. Oil prices are 32% higher than a year ago.

Protests took place in and around the capital Jakarta, plus Surabaya, Makassar, Kendari, Aceh, and Yogyakarta, among a series of demonstrations led by students and labour groups that police say could draw big crowds this week.

Thousands of police were deployed across Jakarta, many guarding petrol stations, fearing they could become targets of mounting anger over a price hike that unions say will hurt workers and the urban poor the most.

Small rallies took place at the weekend and on Monday, with tyres burned and some roads blocked as demonstrators vented their anger over the decision, which comes amid rising food costs and with the economy still reeling from the impact of the coronavirus pandemic.

Thousands gathered in Jakarta on Tuesday, marching and chanting slogans denouncing the government’s decision and calling for an increase in the minimum wage.

Subsidised fuel is a sensitive issue in Southeast Asia’s biggest economy, but the government has sought to soften the blow through compensation measures for 20 million households, including direct cash transfers. The price increase is expected to push up inflation.

Authorities said 24 trillion rupiah ($1.62 billion) in additional welfare programmes would go to those needing them, while hotlines would be set up to hear complaints.

“These are very difficult conditions, but if you look at the assistance provided by the government, it is quite large,” Minister of Social Affairs Tri Rismaharini told a news conference.