Shandong Nanshan may expand Indonesia site into $6 billion aluminium complex

2023-05-15

May 15, 2023 - China's Shandong Nanshan plans to expand its new Indonesian alumina plant to a $6 billion aluminium smelting complex by 2028, a company executive said, which would be among the largest foreign investments in the resource-rich nation.

Shandong Nanshan is among a growing group of private Chinese companies making multi-billion-dollar investments in Southeast Asia in sectors such as metal processing and oil refining amid a cooling Chinese economy and tighter regulatory scrutiny at home.

The company started up its 2 million tonnes per year (tpy) alumina facility last November at the Galang Batang special economic zone (SEZ) on the island of Bintan, located about one hour by ferry from Singapore.

Now running at full capacity, Nanshan processes bauxite mined from Indonesia's Kalimantan region and exports alumina to neighbouring Malaysia and also sells to international traders.

Nanshan, with plans to bring more Chinese firms to the site, intends to start building a 250,000-tpy aluminium smelting unit later this year, part of a plan to construct a 1 million-tpy aluminium plant by 2028, a company executive said last week, asking to remain unidentified, eventually producing high-end aluminium ingots for the aircraft and electric vehicle industries.

To fuel the alumina facility, Nanshan operates a 160-megawatt (MW) coal-based power plant within the SEZ. The site's general manager, Hao Weisong, said on Tuesday that the company plans a 100-MW solar power facility and has also agreed to buy renewable power from state utility Perusahaan Listrik Negara.

The SEZ's operating company, PT Bintan Alumina Indonesia, was last year granted a full waiver of income tax for 20 years, Susiwijono Moegiarso, secretary general of the National Council of Special Economic Zones, said on Friday.

He said investment at the site has thus far totalled 17 trillion rupiah ($1.16 billion).

Indonesian President Joko Widodo, who visited the site last year, is focusing on minerals processing to extract more value from its vast mining sector, and the government may impose an export ban in June on unprocessed minerals, including bauxite.

Moegiarso said that the SEZ has committed to supplying 33.8 per cent of its power from renewable sources by 2032.