Chinese companies step up commodity cooperation in Indonesia amid export restrictions

An employee of a steel manufacturing company in Wuxi, east China’s Jiangsu Province, works on stainless steel products for export to New Zealand. The batch of more than 300 products will be delivered by the end of January. Photo: cnsphoto

Chinese companies are stepping up efforts on raw material processing and export cooperation with local trading partners in Indonesia, a major global supplier of non-ferrous metals, including nickel and aluminum, in a bid to help Indonesia to modernize its industry, while ensuring an adequate supply of metal in a context of growing domestic demand in the Chinese market for electric batteries, the largest in the world.

The efforts came as Indonesia plans to halt exports of raw materials as part of an effort to attract investment in its resource processing industry and improve Indonesia’s external trade balance, according to the media.

While Indonesia’s move drew opposing voices from members of the EU, another market heavily dependent on the country’s commodity production, Chinese companies have actively responded to the call by expanding the joint cooperation in the advanced raw material processing industry in the country of Southeast Asia. , which will help take bilateral trade to a new high, industry insiders said.

Chengtun Mining, an industrial conglomerate based in Xiamen, east China’s Fujian Province, said in a recent public statement that it plans to set up a new company with Indonesia Extension in the country, with an initial share capital of approximately $ 1 million.

The joint project is intended to process and export intermediate nickel-related products with smelting technologies and financing from Chengtun, a source from Chengtun Mining told the Global Times on Monday, reporting that the company’s production, as than processed products, will not be included in trade. to prohibit.

Construction on the project will begin next year and is expected to be completed in June or July 2023, with an expected production capacity of around 40,000 tonnes of nickel-related products, the source said, adding that the use capacity will be expanded in the future.

“Once put into production, our products will be intended for all markets, but we can prioritize exports to the Chinese market when there is demand,” he said.

Another Chinese company, Huayou Cobalt, said this month that it has started trial production on some production lines in Indonesia. The project is designed to produce 60,000 tonnes of products related to nickel and other metals per year.

Indonesia is China’s largest source of ferronickel imports, accounting for around 84% of China’s total ferronickel imports. From January to October, the import volume of ferronickel from Indonesia reached 2.61 million tons, an increase of 21.13% year-on-year.

Cooperation between Chinese enterprises and local Indonesian enterprises can help Indonesia improve its levels of smelting and raw material processing and production capacity, and increase the added value of products, Zhou Shijian, former vice president of the Chinese Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, the Global Times told the Global Times on Monday.

The cooperation will also bypass restrictions on the export of Indonesian raw materials, Zhou noted.

Ternary energy batteries for new energy vehicles are expected to become the main driving force behind nickel demand in the future, which would make China a major user of Indonesian metals.

Other corresponding cooperations should also generate fruitful results in the near future, in particular the production of alumina.

The China Hongqiao Group told the Global Times on Monday that progress on the second phase of its alumina plant in Indonesia is going smoothly.

“Our goal is to reach the production capacity planned in 2022 and to reach full production within the year,” the company said, referring to the announcement it made in the Indonesian project union in 2019.