China's Nanjing Iron & Steel to invest in coke project in Indonesia
- The plant will have capacity for 2.6 million tonnes a year, the company said in a filing to the Shanghai Stock Exchange.
- Dalian coke futures have climbed more than 35% this year as Chinese capacity has been put under pressure.
China's Nanjing Iron & Steel Co Ltd said on Wednesday it would invest in a coke plant in Indonesia to sidestep tougher Chinese environmental rules and to build new capacity closer to major coking coal exporter Australia.
The plant will have capacity for 2.6 million tonnes a year, the company said in a filing to the Shanghai Stock Exchange.
China, the world's top steel producer, produced 471.3 million tonnes of coke in 2019. But it has been on a drive to curb excess capacity to produce the steelmaking ingredient and has shut down old plants to reduce pollution.
Dalian coke futures have climbed more than 35% this year as Chinese capacity has been put under pressure.
Units of Nanjing Iron & Steel, Tsingshan Holding Group, Shanghai Decent Investment Group and others would set up a joint venture to build the plant in Morowali Industrial Park with total investment of $383.48 million, the company said.
Nanjing Iron & Steel will hold 78% in the venture through its unit, it said.
"Indonesia is closer to the major coking coal exporter Australia, and transportation fees are relatively low," the Chinese steelmaker said in the filing.
China has stopped taking coal shipments from Australia amid escalating tensions between the two countries, according to media reports in October.
Nanjing Iron & Steel also said companies in Indonesia faced less pressure on capacity and fewer environmental restrictions than those in China.
Indonesia's environment ministry could not immediately be reached for comment outside business hours.
The investment was pending approval from both governments, the Chinese firm said, adding that there was a risk the project would be subject to anti-dumping duties in China, which currently levies such tariffs on coke imports.
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