(Yicai Global) June 28 -- China's largest cast iron pipe maker will inject new capital to commence second-phase operations at a ferronickel joint venture project in Indonesia, in a move expected to more than double capacity.

Xinxing Ductile Iron Pipes will pump USD13.5 million into PT Megah Surya Pertiwi, a JV formed with local Harita Group in 2015, the Beijing-based firm said in a statement.

Although the firm did not provide specific details on the capacity increase, the original JV plans specified that the second phase of the project on Obi Island, Moluccas, would bolster output to 570,000 tons annually, up from 190,000 at present. 

The second phase includes the construction of four rotary kiln-submerged arc furnace production lines for ferronickel as well as supportive generator units and public infrastructure. The project's total investment is expected to reach USD352 million and it will take more than five years for investors to recoup their outlay.

The company started construction of the facility in August 2015 and completed its first shipment of products to China earlier last year.

MSP's other contributors will inject capital based on their stakes at the same time, while respective shareholding ratios will remain unchanged.

The joint venture leverages Indonesia's rich mining resources cheap power generation as well as raw material costs. Ferronickel alloy serves as an additive in the steel industry that can improve steel's bending strength and hardness. It can make cast iron's structure more well-distributed and enhance its density.

Editor: William Clegg