UAE Firms Launch $5b Projects in Indonesia

Khaleej Times, Issac John,15 February 2010

DUBAI — MEC Holdings, part of the Dubai-based Trimex Group, said on Sunday that it has begun work on six major projects in Indonesia involving a total investment of $5 billion in partnership with the Government of Ras Al Khaimah.

The projects — a coal mine, railway, an aluminum smelter, a fertilizer plant, a port terminal and a power plant — are making significant headway, and the flagship $1 billion rail project is on track for commissioning in 2012, said Madhu Koneru, MEC’s Executive Vice-Chairman.

MEC Coal and MEC Infra — two special purpose vehicles set up as a joint venture between the Ras Al Khaimah Investment Authority (Rakia) and MEC Holdings —are spearheading the projects in partnership with India’s National Aluminum Co (Nalco) and Infrastructure Leasing & Financial Service Group (IL&FS), he said.

MEC Coal is developing the coalmine, which has an estimated two billion metric tonnes in coal reserves, while MEC Infra undertakes the 130-kilometer rail project.

Work on the rail track, the first private railway in Indonesia, will begin next month. The rail will link the Muara Wahau coal mine in East Kalimantan’s East Kutai district with the coast, where MEC Holdings is investing $250 million on a new port capable of handling cape-size vessels. “Land acquisition of 250 hectares for the terminal has already been completed. The port will be the region’s first fully integrated facility to load vessels using an automated conveying system,” said Koneru.

Koneru said the mine and railway would be central to a complex of facilities that includes a power plant fuelled by coal, an aluminium smelter, a fertilizer plant and a high capacity port terminal with a total integrated investment valued at $5 billion.

MEC is partnering with global railway and transportation services leader, CANAC for railway and port operations and maintenance.

With equity partner Nalco, an Indian government entity and Asia’s largest integrated aluminium complex, MEC will invest $2 billion in the greenfield aluminium smelter with capacity of 500,000 tonnes per annum. The smelter will depend on bauxite import from India. A further $2 billion investment will build a 1,250 MW coal-fired power plant and other auxiliary facilities for the smelter. Both projects are scheduled for competion in 2013.

ITNL, a subsidiary of IL &FS Group, is providing MEC financing to build the transportation infrastructure, railway network and deep-sea port, said Koneru.

“The land acquisition for all the projects is almost complete and the project is on schedule. In the next five years, MEC’s investments alone will create 5,000 new jobs in East Kalimantan,” said Koneru.

Initially, MEC is looking at a coal production of two million tonnes starting this year from its 12,000-hectare coal concession in East Kutai. Production from this site is expected to reach 32 million metric tonnes annually by 2019.

MEC Holdings’ parent company Trimex Group is a global minerals and metals conglomerate.

issacjohn@khaleejtimes.com