On August 11, 2010 MIGA issued a guarantee of $207 million to Strand Minerals (Indonesia) Pte. Ltd of Singapore for its equity investment in the PT Weda Bay Nickel Project. Strand Minerals is jointly owned by Eramet SA of France and Mitsubishi Corporation of Japan. The coverage was initially for a period of up to three years against the risks of transfer restriction, expropriation, breach of contract, and war and civil disturbance. On August 9, 2013 the contract was extended an additional two years.
During this period it is anticipated that approximately $230 million will be invested for the engineering and feasibility studies necessary to conclude a bankable feasibility study for the operation of a nickel-cobalt mine with a hydrometallurgical processing plant on Halmahera Island. Once the studies are complete, an investment decision will be taken on whether to continue developing the mine and building a processing plant. It is anticipated that the final investment decision should be made before the end of 2012.
The core project will require large capital expenditure to develop the mine and the processing plant. In addition, in order for the mine to be commercially feasible, additional capital expenditure will have to be undertaken on the associated transportation infrastructure including roads, airport, and port.
The Weda Bay deposit is one of the largest undeveloped nickel projects with 5.1 million tons of nickel contained in measured, indicated, and inferred ore resources. Should this project be developed it will allow Indonesia to become one of the world’s major nickel producers. It will provide significant employment, both during construction and when in operation, major government revenues, and will contribute substantially to the local economy, in particular for the North Maluku Province. It will also provide an important demonstration of how a major natural resource project can bring benefits to the Indonesian people and be developed in a socially and environmentally sustainable way.
MIGA’s support for this investment is aligned with the World Bank Group’s country partnership strategy for Indonesia for 2009-2012, particularly with regard to making Indonesia’s private sector a driver in broad-based growth, and increasing the country’s competitiveness regionally and globally.
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