China’s Nanjing Iron & Steel company will invest in a 2.6mn mt per year coke plant in Indonesia’s Morowali Industrial Park (MIP) to create additional capacity near Australia.
China produced 471.3mn mt of metallurgical coal in 2019. However overcapacity is currently pressurizing producers. The country is now motivated to limit excess coking coal production capacity as well as cut pollution by closing antiquated facilities. China has unofficially curbed Australian coal shipments as tensions have worsened between the two countries in October, media reports indicated.
A joint venture with $383.48mn in capital funds will be set up to construct the plant in MIP through units from NISCO, Tsingshan Holding group and Shanghai Decent Investment group along with others. According to reports, NISCO will hold 78pc of the project.
The steelmaker also noted that the new site is closer to major export destinations, thereby lowering transportation. Moreover, Indonesian companies have a lesser burden on capacity or environmental restrictions, compared to China. The plan is subject to approval from both governments due to the plant being subject to anti-dumping levies in China, as tariffs are presently collected on coke imports.