Nangang to build 2.6 mln t/y coke plant in Indonesia

“Because of our large size, our demand for coke is big, but the availability of domestic coke is declining due to capacity reduction schemes in China,” he told Mysteel Global. Over this year’s January-November period, China had removed a total of 40.7 million tonnes/year of small-sized and inefficient coking capacity nationwide, while only 31.1 million t/y of capacity was newly commissioned – resulting in a net cut of 9.6 million t/y of coking capacity, as reported.

Nangang’s project will draw on the advantages of Indonesia’s abundant coal resources and the country’s proximity to the world’s largest coal exporter, Australia, according to the official. The latter is significant given that China officially began banning the import of Australian coal since October this year, as Mysteel Global reported.

Also attractive to the Chinese mill are the lower labour costs and higher environmental carrying capacity in Indonesia compared with China, according to the official. Nangang also anticipates that coke imported from the Indonesian plant will offer “high profitability” compared with domestically-produced coke and thus, after satisfying its own needs, the company may also sell the surplus coke to other Chinese steel mills, he said.

The project will be located in the Morowali Industrial Park in Sulawesi, Central Indonesia, and will cost some $383.5 million, according to a company announcement on November 19. The plant will include four 5.5-meter coke ovens and will take 18 months to build but when construction might start remains unknown, and the official declined from confirming all these details.

To realise the project, Nangang is joining with four Chinese-invested companies in Indonesia including a local subsidiary of Tsingshan Group, the world’s largest stainless producer and the driving force behind the establishment of the Morowali Industrial Park, Mysteel Global notes.

The four companies will set up a joint venture – PT Kinrui New Energy Technologies Indonesia – in Indonesia to facilitate the construction of the coke project. Nangang will hold 78% and Tsingshan subsidiary PT Indonesia Morowali Industrial Park 10%, according to Nangang’s release.  

Indonesia has become a hotly-pursued market especially for the Chinese investments and the sectors include steelmaking, electricity generation, infrastructure construction and white goods and electronics manufacturing. China is Indonesia’s second largest investor after Singapore, as Mysteel Global reported.

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Russ McCulloch, russmcculloch@mysteel.com