China’s second-biggest aluminium producer Shandong Nanshan Aluminium Co. Ltd (NAC) will begin construction of a smelter worth 5 billion USD in Indonesia later this year.

Indonesia’s Minister of Industry Hidayat said the company would also build a 300-megawatt power plant on Bintan Island in Riau Island province to fuel operation of the smelter. Construction work on the projects will begin in April and is expected to be completed within two years.

The development is the outcome of an agreement signed in 2013 between the Chinese company and Indonesia’s PT Mitra Karsa Utama. NAC is to hold a 95 percent stake in the joint venture.

The facility is designed to produce 2.1 million tonnes of alumina and 570,000 tonnes of aluminium ingots each year.

Some part of the output will be exported to several countries, including China, Japan and the United States, while the rest will supply domestic demand.

Indonesia has implemented a ban on unprocessed mineral exports this January in a bid to add value to its mining commodities.

The export ban has already prompted many foreign companies that source their materials from Indonesia to build smelters in the country.

At present, Indonesia is China’s biggest bauxite supplier.

Another Chinese aluminium producer, China Hongqiao Group, has cooperated with Indonesia’s PT Cita Mineral Investindo Tbk to build an aluminium refinery in Ketapang, West Kalimanta province, which will become operational by 2015.

Currently Indonesia has only one aluminium smelter in North Sumatra, operated by PT Indonesia Asahan Aluminum (Inalum).-VNA