By: Shirley Christie
Russian investors have confirmed plans to invest billions of dollars next year in a pair of Indonesian projects - a resources railway and a nickel smelter - a government official said.
Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), said on Wednesday that he had met with Russian Railways, a state-owned company that confirmed its intention to build a railway line in Central and East Kalimantan.
The meeting occurred during Gita’s trip to Moscow earlier this month to promote investment in Indonesia.
His statement effectively confirms August reports that a Russian company was expected to invest $2.5 billion in the construction of a 185-kilometer railroad connecting the two provinces, which have large coal deposits.
“The Russian [investors] had stated their intention to invest here in railways to support transportation of natural resources,” Gita said.
The signing of a memorandum of understanding between Russian Railways and Indonesian entities is expected in November, when Russian President Dmitry Medvedev visits Bali for the East Asia Summit, Rizal Affandi, an official at the Coordinating Ministry for the Economy, said in August.
East Kalimantan has attracted a series mining entrepreneurs. Kaltim Prima Coal, a unit of the Bakrie family’s Bumi Resources, has coal-mining concessions in the province, while hundreds of other companies are engaged in exploration in the province.
Gita said he also met with representatives of Russia’s Solway Industries, which confirmed plans to build a nickel smelter in Halmahera, North Maluku, with investment of up to $3 billion.
Earlier reports suggested the smelter would have a capacity of 150,000 tons per year. The Russian company possesses several exploration concessions in Indonesia, including one in Halmahera that is estimated to contain about 114 million tons of high-quality nickel ore.
Gita said the two Russian companies were likely to make their investment early next year.
A separate commercial transaction between the two countries is encountering difficulties, with seven Russian military helicopters purchased by Indonesia for $56 million proving to be unfit for combat.