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March 27, 2009

Chinese firm axes Indonesian nickel project

A $500 million nickel pig iron project planned for Indonesia has been scrapped, a senior official at Shanghai Tsingshan Mineral Company Ltd, the majority partner in the venture, said on Thursday.

The deal had fallen through because the local government wanted to take back mining rights, Jiang Xinfang, president director of Tsingshan, a subsidiary of the country's top private stainless steel producer Tsingshan Holding Group, was quoted by Reuters as saying.

"The project was called off in August-September last year," Jiang told reporters on the sidelines of a ferro-alloy conference in Hong Kong, adding that weak nickel prices had also triggered the termination.

The Chinese company holds a 51 percent stake in the project on Obi island in North Maluku in Indonesia, and is partnered by Indonesian state-controlled miner PT Aneka Tambang, in the operation which would have produced 30,000 tonnes of nickel in pig iron (NPI) annually.

Tsingshan group is building a nickel pig iron plant in Fujian province in China with capacity of 15,000-20,000 tonnes of nickel in pig iron annually, he said. The building would be completed in Oct and the capacity would be expanded in the future.

NPI is used in the production of stainless steel for which China is the world's top producer, and priced with nickel MNI3, which has lost more than 80 percent from 2007's all-time high.

Tsingshan produces NPI for its stainless steel production without using iron ores.


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