Singapore Banks Increasingly Disburse Loans to Indonesian Smelters after China

Selain China, Bank Singapura Makin Agresif Kucurkan Kredit ke Smelter Indonesia

The government has confirmed that foreign and domestic banks have recently begun to grow significantly in financing domestic metal mineral smelters and processing and refining or metal mineral smelter projects.

Deputy for Investment and Mining of the Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marves) Septian Hario Seto said, apart from Chinese financial institutions, a number of banks from Singapore have recently begun to be aggressive in disbursing domestic smelter financing this year.

“Right now I see Singaporean banks are also quite aggressive in financing downstream projects in Indonesia, domestically there are maybe only four to five banks that have the ability to finance downstream ,” said Seto, his nickname during the webinar, Monday (12/12). 6/2023).

The Singapore banking financing follows a credit commitment previously channeled by a number of Chinese financial institutions for domestic nickel ore smelter projects since the export ban of this commodity in 2020.

On the other hand, said Seto, loan commitments from foreign entities have recently been followed by several domestic banks. He hopes that credit disbursement from financial institutions will be more intensive amid the relatively large capital requirements of the current smelter construction project.

Meanwhile, the average smelter construction cost for each unit is in the range of US$1.2 billion to US$1.4 billion. Currently, the share of capital that domestic companies can afford is around 30 percent, which is offset by loans from financial institutions around 70 percent.

“On average, if I see local domestic companies involved in this downstream project, they already have relationships with domestic or Singapore banks, so far they don’t really need the government’s role in this matter,” said Seto.

Previously, the Indonesian Association of Bauxite and Iron Ore Entrepreneurs (APB3I) encouraged the government to invest more intensively in the construction of bauxite ore smelters after the moratorium on the export of aluminum raw materials on June 10, 2023.

Acting Daily Chairperson of APB3I Ronald Sulistyanto said the government’s investment in the bauxite ore processing line was important amidst the lack of confidence from investors and lending institutions to invest in the construction of the smelter.

“If the Himbara bank says the project is not feasible , what about foreign banks,” said Ronald when contacted, Monday (9/1/2023).

According to Ronald, the government’s commitment to invest more intensively in the bauxite smelter will help improve the economic level of the project which is considered too risky.

“The government can participate in investing through SOEs, later on joint operations can be formed , for example if there are 30 companies making seven smelters divided by four companies merging into one, there will be a lot of capital,” he said.


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