Reuters reported that Russia's Solway Group has confirmed plans to build an Indonesian nickel smelter with the capacity to produce 50,000 tonnes of the metal a year.

Mr Vasily Tsarev consulting partner for Solway in Indonesia said that "We expect to start production in 2014." He added that capacity could be expanded to 80,000 tonnes.

Mr Hatta Rajasa Indonesia's chief economic minister said that the Russian firm planned to invest USD 3 billion to build the smelter on Halmahera Island in eastern Indonesia, a sign of growing interest by investors in the country's mineral processing industry.

Mr Tsarev said that the firm will feed the plant with nickel ore from its concession on the same island, which has confirmed resources of 50 million tonnes ore. He added that "But resources can range between 110 and 115 million tonnes when we do further exploration."

Indonesia currently produces ferronickel from three smelters operated by Aneka Tambang, and nickel in matte from smelters operated by PT Inco Tbk, a unit of Brazil's Vale.

French's Eramet, the world's sixth largest nickel producer, has a nickel project on Halmahera in a joint venture with Indonesian state miner PT Aneka Tambang Tbk.

Mr Tsarev said that aside from the nickel smelter, privately owned Solway plans to build a 400 MW coal fired power plant which will be used to power the smelter. He added that the firm will burn low quality coal with heating value 5,000 to 5,500 kilocalorie per kilogram for the power plan which will be supplied by its coal concession in West Papua.

(Sourced from www.reuters.com)