Indonesian sovereign wealth fund Danantara will invest to develop a nickel processing hub with Chinese battery and material recycler GEM, tapping into $8.3 billion in funds available for investment in 2025, an official said on Tuesday.
The project will mark Danantara’s first foray into Indonesia’s crucial nickel sector as the government seeks to capitalise on the country’s vast resources of a metal used in electric vehicle (EV) batteries. Indonesia is the world’s biggest nickel producer.
“There is a head of agreement that we just signed today with GEM in China … essentially creating a green industrial estate,” the fund’s investment chief Pandu Sjahrir told Reuters in an interview. He said the project would target net-zero carbon emissions and aim to operate in a sustainable manner.
“GEM is doing it with Vale, with EcoPro, and also Merdeka and us,” he said, referring to South Korean battery materials maker EcoPro and nickel miners PT Vale Indonesia and Merdeka Copper Gold. He declined to put a figure on the investment or say when it could start operating.
Asked to comment, Jakarta-based Merdeka said it had no information to share. The other companies did not immediately respond to requests for comment.
Pandu said Danantara Indonesia will manage 135 trillion rupiah ($8.31 billion) in investment funds this year, 70 trillion rupiah of which comes from dividends of state-owned companies.
The rest will come from sales of so-called Patriot bonds to Indonesian companies and a recently obtained $10 billion syndicated bank loan, he added.
Launched in February, Danantara manages all government-owned companies, which have combined assets of more than $900 billion. It is modelled on other sovereign funds such as Singapore’s Temasek.
PATRIOT BONDS
Pandu said the fund’s decision to issue Patriot bonds had been well received among leading Indonesia companies.
Some of Indonesia’s richest people, Prajogo Pangestu, who controls the Barito Pacific Group conglomerate, Garibaldi Thohir with AlamTri Group and Franky Widjaja of Sinar Mas Group, are among those to have expressed interest, Pandu said. Widjaja’s spokesperson declined to comment, while spokespeople for the others did not respond to a request for comment.
Danantara aims by October to raise 50 trillion rupiah from the bonds, which will be sold in 5- and 7-year tranches carrying a 2% interest rate, according to a video presenting the bonds to business people. The rate is far below that of government bonds with similar terms.
Pandu said the instruments were also partly “symbolic”. “It’s a call for the business community to stand together to contribute to our progress,” he said.
Investments that Danantara is considering offshore include Hajj lodging for Indonesian pilgrims in Saudi Arabia and upstream oil and gas in the U.S., Pandu said.
Reuters
