Jakarta. Sulawesi Mining Investment, a joint venture of Chinese stainless steel producer Dingxin Group and local conglomerate Bintang Delapan, held a groundbreaking ceremony for its multi-billion-dollar integrated smelter project in Morowali, Central Sulawesi, last week.

The ceremony, which was attended by President Joko Widodo, marked the start of a multi-year construction of smelters and processing plants that will produce nickel pig iron, cold rolled coils and hot rolled coils.

Industry Minister Saleh Husin said on Friday that the three phases of the construction will start with developing processing plants able to produce 300,000 tons of nickel pig iron every year. Coal-fired, 130 MW power plants will provide electricity to the processing plants.

At this stage, investment may amount to about $635 million.

The second phase, Saleh said, will boost the processing plants’ production capacity of nickel pig iron to 600,000 tons. The facilities are set to be supported by additional 300 MW power plants. Additional investment needed for the second phase is estimated at $1.04 billion.

Saleh said the first and second phases of development — which may require up to 5,000 workers — are targeted for completion at the end of 2015.

The final stage of development involves adding 300,000 tons of nickel pig iron production capacity with additional 300 MW power plants. This stage will involve an $820 million investment and development is scheduled for completion by the end of 2017.

The Morowali project will also produce stainless steel products, including cold rolled coils (CRD) with a production capacity of 600,000 tons per year and hot rolled coils (HRC) with the same capacity. No details of investment size, specific time frame and details were given for this part of the project.

The president director at Sulawesi Mining, Alexander Barus, said the Morowali project would eventually afford Morowali district a production capacity of up to 1.2 million tons of nickel pig iron and thereby spur the development of the country’s steel sector.

“The downstream steel industry will need suppliers, logistics service providers and accommodation. Our power plants will create more indirect jobs,” Alexander said.

In October 2009, Dingxin Group and local conglomerate Bintang Delapan, which also have mining, oil and gas, chemical, wood processing and fertilizer enterprises, agreed to form a joint venture.

Sintong Panjaitan, a retired general and former commander of the army’s Special Forces unit Kopassus, is a stake holder in Bintang Delapan.

Local media have reported on Sintong’s close connections to Luhut Binsar Panjaitan, another former general with Kopassus connections, who currently serves as the president’s chief of staff.

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