Solway's Halmahera project will need US$2.5 billion investment
Monday, March 12 2012 - 06:52 AM WIB
Aquila Nickel Indonesia, a subsidiary of the Russian based nickel and ferronickel producing company Solway, stated that the finalized results of its preliminary feasibility study (PFS) in 2011 indicated that the company will require to secure at least US$2.5 billion worth of investment to cover all aspects of its smelter project in Halmahera.
"Only about 50 percent of the sum will be spent to finance the construction of the smelter, while the remaining 40 percent will be needed to provide supporting external infrastructures, such as roads and power station," the company's president director Dmitry Privalov told Petromindo.com.
Construction of the plant is expected to start at the end of 2013, which will take about 24 months to complete. Once entering the production stage, the new plant should be able to produce between 40,000 and 42,000 tons of nickel in ferronickel per year, acquired from the processing of 4 million wet metric tons of nickel ores each year.
The results of the PFS also revealed that the company will need to construct around 350MW capacity power station in the area to sustain the day-to-day operation of the smelter, which is expected to be powered by coals produced from its newly acquired mining concession through PT Bumi Cakrawala Nusantara in Maybrat regency of West Papua.
According to Privalov, up to 30 percent of production cost in ferronickel business is spent for providing energy. In order to cut production cost, one will need to cut the cost of energy delivery. Additionally for Solway, ?if we could use low rank coal as the source of energy, it would at least come from our own coal concession,? he said, adding that exploration is still underway in Papua.
Like other mineral producing company, nevertheless, Solway's smelter realization is hampered by the recently released mineral value added regulation, which prevent the exports of ores starting May 2012.
"Not being able to export our ores will definitely disrupt our cash flow," he said, adding that the company is still actively conducting consultation with the government regarding the matter.
Editing by David Mustakim