Jindal signs pact with Indonesian firm

Mumbai: Haryana-based Jindal Stainless Ltd and Indonesian mining company PT Antam Tbk have signed a joint venture to develop a nickel smelting and stainless steel facility in North Konawe, South East Sulawesi, at an investment of about $700 million.

Antam will have a 55-per cent in the project with Jindal owning a 45-per cent share. Funding will be mix of debt and equity.

Initially, the project is to have a capacity of around 20,000 tonnes a year (tpa) of contained nickel in ferronickel and around 250,000 tpa for stainless steel, mainly the high quality 300 series. Based on a market survey to be commissioned soon, the final end product may be stainless steel slabs or stainless steel long products, Jindal Stainless said.

Antam will contribute its mining and nickel processing expertise as well as its local knowledge and experience, while Jindal will provide stainless steel processing and marketing expertise and its global marketing network for sales and distribution.

The proposed company would be called PT Antam Jindal Stainless Indonesia. Construction activities would start in early-2009 and the project will be commissioned by mid-2011.

The integrated project shall process nickel ore from Antam’s Mandiodo concession, which has an average nickel grade of about 1.5 per cent. In addition to nickel smelting and stainless steel, the facility will also include its own coal-based captive power plant, water treatment plant, seaport and other necessary infrastructure facilities. This project could be the first one where a stainless steel processing mill is located together with a nickel plant and mine. It may result in very significant cost savings and make the venture highly competitive.

For Antam, this project is part of its business strategy of product diversification to improve shareholders’ value. This project also helps the industrial development of Indonesia as it involves the processing of natural resources within the country, creating maximum value compared to simply exporting ore.

As for Jindal, which has had a stainless steel cold rolling complex in Indonesia for several years, the development of the project is part of its business strategy to become a leading player in the stainless steel industry globally.