Coal, aluminum firms to invest $4.76 billion in East Kutai

KALIMANTAN: Two foreign firms plan to develop projects worth Rp 45 trillion (US$4.76 billion) in East Kalimantan, the province’s top official says, Jakarta Post quoted.

The projects will be funded by Rhas Al Khaima, a United Arab Emirates-based coal mining company, and National Aluminium Co. (Nalco), an Indian-based manufacturer and distributor of aluminum products, East Kalimantan Governor Awang Faroek said in a telephone interview recently.

“The projects will cover constructions of a railroad, a coal terminal, a steam power plant and a smelter. All of these will be built in East Kutai regency,” Awang said.

The governor said that he had signed separate memorandums of understanding (MoU) with the companies on the projects.

The first agreement was signed by Awang and a representative of Ras Al Khaima during the 2009 World Islamic Economic Forum in Jakarta.

The second deal, with Nalco, was signed during a bilateral Indonesia–India trade ministerial forum in Jakarta in 2011.

Ras Al Khaima will oversee the construction of the railroad and coal terminal, while Nalco will oversee the development of the power plant and smelter.

Awang said that the projects would be divided into four phases. The first phase will cover railroad construction, which would then be followed by the construction of a coal terminal by Ras Al Khaima.

Nalco will take over the projects in the third phase, when they start construction on the steam power plant. The last phase will cover the construction of the smelter.

Contacted separately, State Investment Coordinating Board (BKPM) chief M. Chatib Basri confirmed the two companies’ interests, saying that the projects would be beneficial for the nation’s economy.

“The government welcomes their investment, because East Kalimantan has so much to offer to foreign investors. The total value of the projects shows the importance of the plan,” Chatib said on Wednesday.

However, Chatib added that neither company had registered their projects with the BKPM.

“As far as I know, these companies have only signed MoUs. It means that they are interested in investing in the province, but have yet to start to implement their projects,” Chatib said.

According to Awang, at the moment, the local administration was negotiating with palm oil plantation owners over land acquisition for the railroad.

“I do not set up deadlines for these projects, but hopefully they will all be complete in 2014,” the governor added.

The steam power plant is expected to produce 1,250 megawatts of electricity when operational, while the smelter will have an annual production capacity of 500,000 tons.

The governor said he planned to turn his province into a robust energy and agribusiness center.

According to the BKPM, the number of projects realized in East Kalimantan rose almost by 50 percent to 146 in 2011, from a year earlier.

However, the total value of the projects declined, down 44.84 percent to $602.4 million in 2011.

Chatib said that the commitments made by Ras Al Khaima and Nalco would boost development in the region, asking investors in the UAE and India to explore additional investments in different sectors in East Kalimantan.

“The three sectors with the most potential for foreign investors are mining, natural resources and transportation,” he said.

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