Indonesia: Coronavirus Will Delay US$11 Billion in Projects
Indonesia has warned that flow-on effects from the coronavirus will delay billions of dollars in nickel projects across the country.
Indonesia expects the COVID-19 coronavirus outbreak in China and around the world to have a dampening effect on billions of dollars of projects in the Southeast Asian country.
Speaking to reporters, the government’s coordinating minister overseeing maritime resources and investment affairs said that COVID-19 will likely delay the development of nickel projects in particular, namely those on the island of Sulawesi and in the province of North Maluku.
“It will have impacts on the projects and in turn affect exports that should have started this year … some of them will be delayed by months,” he said.
One of the operations likely to be affected is Chinese nickel giant Tsingshan, which operates the Morowali stainless steel complex on Sulawesi. Tsingshan made news in 2018 when it announced plans to construct a high-pressure acid leach (HPAL) plant at the complex. HPAL technology is used to increase the grade of nickel to a level at which it can be used in battery technology.
The plant — which is expected to be completed this year — will have a capacity of 50,000 metric tons per year, and originally had a price tag of US$700 million, though it has since been revised to upwards of US$1 billion.
In early February, the spokesman for the nickel industrial complex told Reuters that the operation was unaffected by the virus, and said its worker population had not been infected.
However, a Tsingshan source said at the time that while production was ongoing, eventually COVID-19’s impact would be felt due supply constraints from China caused by ongoing quarantines.
“The production side is still OK, but some raw materials coming from China will be affected … construction will also be affected by equipment and personnel from China,” the source said.
In addition to the nickel complex in Morowali, there are also projects in Konawe on Sulawesi that are likely to be affected, along with Tsingshan and Eramet’s (EPA:ERA) Weda Bay nickel pig iron plant in Weda Bay in the province of North Maluku.
The Weda Bay plant was projected to begin operations in H1 2020 as recently as October of last year.
So far, the COVID-19 outbreak has weighed heavily on global markets through its impact on China, where almost 80,000 infections have been confirmed along with over 2,700 deaths.
As February comes to an end, focus has shifted to the spread of the outbreak outside of China, which has been imposing strict quarantines on its population.
As of Tuesday (February 25), there were large clusters of infection in South Korea, where almost a thousand are infected and 11 have died; in Italy, where there are 326 confirmed infections and 11 deaths; and in Iran, which has reported 95 confirmed infections and 16 deaths.
In Australia, the impact of the coronavirus is chewing into the nation’s budget, with the government warning that steps to stop the spread of the disease by both China and Australia will slow the resource, tourism and education industries, with flow-on effects to Canberra’s bottom line.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.