Indonesia says Fortescue, China's Tsingshan in talks for Borneo investment

JAKARTA, March 30 (Reuters) - Indonesia is in talks with China’s Tsingshan Group and Australia’s Fortescue Metals Group to build a new industrial estate for metal smelting near a planned hydropower plant on Borneo island, a minister said on Tuesday.

The new estate will be located near the 11,000 megawatt Kayan hydropower project in North Kalimantan province, according to Luhut Pandjaitan, Indonesia’s coordinating minister for maritime affairs and investment, who also oversees mining regulations.

“We’re discussing already with Fortescue from Australia and Tsingshan from China to build industrial estate over there,” Luhut told a forum of policymakers, businesses and economists, referring to North Kalimantan.

“So then by 2023, this area, this integrated industry is starting to (do) smelting ... for iron ore, nickel ore and copper,” he said.

He added this development should go in parallel with Indonesia’s project to produce lithium batteries using its nickel reserves.

Tsingshan, China’s stainless steel giant, is also a major player in the Southeast Asian country’s nickel downstreaming ambitions.

Fortescue did not immediately respond to a request by email for comment while Tsingshan could not immediately be reached.

In September, Fortescue said its subsidiary had entered into an agreement with Indonesia’s government to conduct feasibility studies into the utilisation of the country’s hydropower and geothermal resources to support green industrial operations.

Construction of the Kayan power plant, which is being developed by Power Construction Corp of China (PowerChina) and Indonesia’s Kayan Hydro Energy, should begin this year with completion of the first phase projected by 2025, according to local media reports.

Luhut said Indonesia’s next aim is to produce hydrogen fuel at the Kayan plant. (Reporting by Gayatri Suroyo; Editing by Martin Petty)