(Yicai Global) April 25 – Shandong Nanshan Aluminum's stock dropped after the Chinese aluminum product maker said it will spend CNY6.1 billion (USD878 million) on an electrolytic aluminum factory at its production base in Indonesia.

Shares of Nanshan Aluminum [SHA: 600219] ended 2.3 percent lower at CNY3.34 (48 US cents) each today, after earlier falling by as much as 3.9 percent. The wider Shanghai market lost 0.3 percent.

The plant, to be located in Nanshan Industrial Park on Bintan Island in Indonesia's Galang Batang Special Economic Zone, will mainly produce ingots, the Longkou-based firm announced late yesterday. It will have an annual output capacity of 250,000 metric tons, with the products primarily supplied to markets in South Asia and the Association of Southeast Asian Nations, it noted.

Along with the ingot factory, Nanshan Aluminum will also build a supporting carbon plant with an annual output capacity of 260,000 metric tons and public facilities, including docks and reservoirs, it added. The after-tax payback period of the entire project is expected to be less than eight and a half years, it pointed out.

Nanshan Aluminum did not disclose when construction work will begin, but the project will likely become operational between April and July 2026. The project has obtained approval from Indonesian regulators, but it still needs to be given the green light by Chinese watchdogs, the firm said. 

Nanshan Aluminum operates an alumina plant that can produce 2 million metric tons a year at its industrial park on Bintan Island, which will provide sufficient raw materials for the new project, the company said.

The consumption potential and active economic growth of ASEAN and South Asia are huge, and the aluminum ingots and deep-processed products made at the Indonesian factory can meet the Southeast Asian market's needs and, if necessary, demand from China's domestic market, Nanshan Aluminum added.

Editor: Martin Kadiev