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Chinese firms invest in smelters as Indonesian ore export ban approaches

Peak steel?

Chinese firms plan to invest up to AUD$8.6 billion in Indonesian smelters to mitigate the impact of an approaching ban on unprocessed ore exports.

According to ABC News three Chinese companies will be pursuing major investments in Indonesia-based smelters.

Oriental Mining and Mineral Resources and Rui Tong Investment plan to invest $1.5 billion in direct reduced iron plants and Beijing Shuangzhongli Investment Mangagement will invest $7.1 billion in alumina refining plants.

The investments are in response to a blanket ban on ore exports which will come into effect in 2014.

Indonesia’s foreign investment environment has taken a major dive this year, following the introduction of new laws requiring that foreigners divest controlling stakes in mining companies following ten years of operation, and scandals involving underhand business dealing with Australian partners.

Chinese investors appear undeterred however, with Chalco signing a deal this week to develop a bauxite refinery with Indonusa Dwitama, and Bosai Minerals Group announcing a $1 billion investment in an Indonesian bauxite plant last month.

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