SinceJan

.,2014,partscompaniesrushtoIndonesiatobuilduptheferronickelsmelteraccordingtotheGovernmentRegulationNo.1/2014.Untilnowseveral
companieslikePTSMIandPTCahayaModernNickel,investedbyChinesecompaniesalreadyputintoproduction.However,therestrainingpowerandother
deficiencyinfrastructuremakesthecosttobedifferentbyRKEFandBF.ThebasicdemandsforthesetwodifferenttechnologyinRKEFandBFistheoretypes
andpoweraswellasthefuel.Ifwewanttoproduce10,000t/aNickelCapacityinNPI,itshouldbefeededof1.8%NiSaproliteOre.Detailsasbelow.

RKEF BLASTFURNACE DIRECT

REDUCTION/MAGSEP

ORETYPE Saprolite(Ni>1.8%,,Fe<20%, BestforlimoniteSmallBFfor BestforhighFe,lowMgO

S/M>1.5) saproliteduetoslagremoval

PRODUCT NPIwith1012%Ni HighCarbonNPI(about8%Ni) HighslagNPI

POWER Substantialpowerneeded Cogenerationofpowerfromoff Moderateasonlyneededforequipment

gas
Integrationofpowerplantwith
furnaceanissue

COAL/COKE Reductantcoalavailablelocally Operatingcostsdependon Mainenergysourceiscoal

importedcoke

Cokepricesincreasing
OTHER Dustingissuesseverewithsmall Notwellestablishedtechnology
plants
Accretionissuesinreductionasclosetomeltingpoint
Offgashandlingamajorcostarea

Andifweproduce10000tonsnickelpigirononeyearwhichneeds88200tonsinRKEFand917000TONSinBlastFurnace.

AndtakingthenickelorepriceasUSD25/tfor1.8%,soitmaytakeaboutUSD7400/tforoneyearbyRKEFandUSD10200/tforBF.

Item Cost/Unit RKEF BLASTFURNACE

 Quantity/a USD/a Quantity/a USD/a

MiningandTransport

Ore 25 882,000 22,050,000 917,000 22,925,000

ReagentsandConsumables

Coal 65 69,600 4,524,000

Anthracite 100 39,150 3,915,000

Coke 170 286,000 48,620,000

Limestone 15 30,000 450,000

Lime 85 98,000 8,330,000

Fluorite 150 5,300 795,000

Refractory 1,914,000 355,000

ElectrodePaste 910 1,500 1,365,000

Electrodecasing 348,000

NitrogenandOxygen 313,000 360,000

Tappingclayanddrill 1,280,000

Refiningadditives 1,160,000

Labcosts 450,000 450,000

MobileFleet 1,914,000 1,440,000

Power 40 480,000 19,200,000 6,440,000

Personell 550 5,500,000 700 6,000,000

Maintenance 5,000,000 4,700,000

Administration 957,000 1,100,000

Product 30 87,000 2,610,000 130,000 3,900,000

Slag 2 485,000 970,000 455,000 910,000

TOTAL(USD) $73,920,000 $106,325,000

TOTAL(USD/tonne) $7,400 $10,200

ItisreportedthatrightnowonlyseveralcompanieshavecompletedtheconstructionforsmelterinIndonesia.NewsmeltersincludedTsingshanRKEF
(Morowali)inStage2development,Antam(FeNi4),PTKaryatamaKonaweUtaraandBlackspace(Kabaena)partiallycompleted.AsidefromPTIndoferra,
somesmallblastfurnaces(CahayaModernGroup,PTGebeSentra)arestillunderconstruction.However,asthelackoftechnologyaswellasfunds,someother
projectshavealsobeensuspendedsuchasthesmelterinvestedbyFujianFuxingIndustryImportandExportCompany.Besides,theslowferronickelmarketin
Chinaalsopullsdowntheinvestmentsinsmelting.

However,asofnowPhilippinegovernmentAuditonnickeloreminingmakesthenickeloreimportbehardwhichalsostimulatestheferronickelproducersin
Chinatoraisetheprice.Besides,Indonesiagovernmentalsotriestoreleasetheexportbanonnickelorein2017amongthecompanieswhohavebuildup
smelters.Underthiscondition,Ferroalloynetforecaststheferronickelsmelterconstructionmaybeflourishinnearfuture.

PROJECT LOCATION OWNER TECHNOLOG PRODUCT NiPRODN CAPITAL CAPEX NOTES

Y FORM (t/a) COST(US$ (USD/tNi)

million)

CurrentIndonesianProjects

PTIndoFerra KrakatauSteel Indonesian BlastFurnace NPI 10,000 230 23,000 450m3Blastfurnace

Growth

Steelgroup

PTCahayaModern SESulawesi ModernGroup BlastFurnace NPI 1,750 20 11,000

Nickel

ZhenshiGebe FajarBhakti, BlastFurnace NPI 5,000 56 11,000

 Gebe

Sentra,Zhenshi
Hdgs

Macika PTKaryatama BlastFurnace NPI 4,000 45 10,000

KonaweUtama

Harita ObiIs HaritaGroup RKEF(Chinese) FeNi 15,000 320 21,000 Basedon8%Ni,includes120

MWpowerplant

PTSulawesiMining Morowali Tsingshan/PT RKEF(Chinese) FeNi 30,000 656 22,000 Includes2x65MWCoal

(Stage1) Bintang Power

Delapan Plants

PTSulawesiMining Morowali Tsingshan/PT RKEF(Chinese) FeNi 60,000 1030 17,000 Includes2x150MWCoal

(Stage2) Bintang Power

Delapan Plants

PTSulawesiMining Morowali Tsingshan/PT RKEF(Chinese) FeNI 60,000 1000 17,000 Includespowersupply

(Stage3)
 Bintang

Delapan

MakmurNickelsmelt ChinaHanking RKEF(Chinese) FeNi 10,000 245 25,000

Holdings