Russian firms to invest up to $7.5 billion in Indonesian mining

JAKARTA (AFP) - Russian firms plan to invest up to US$6 billion (S$7.5 billion) in Indonesia's mining sector this year, Jakarta said on Tuesday, despite its recent mineral export ban that has worried foreign investors.

Projects include a refinery on Borneo to process bauxite, an aluminium ore, and a railway on the island to transport coal to a port, said Indonesian Chief Economic Minister Hatta Rajasa.

Rusal, the world's biggest aluminium producer, has signed a memorandum of understanding to build the refinery with a local company.

"The investment potential this year is between five and six billion dollars," Mr Hatta said.

The announcement, which came during a visit by Russian Deputy Prime Minister Dmitry Rogozin and a large business delegation to Jakarta, will be a boost following the ban on the export of some unprocessed mineral ores which came into force last month.

It was aimed at transferring jobs and technology to Indonesia by forcing companies to build smelters in the archipelago. But it has led to many companies halting exports, and delaying projects and investments.

Mr Oleg Deripaska, the chief executive of Rusal, said in a statement: "We have long stated our desire to expand into this important South-east Asian market given its increasing prominence on the global mining stage."

Construction of the railway project will begin in 2016, the company behind it said.