China's Nanjing Iron & Steel invests in a coke project in Indonesia

China's Nanjing Iron & Steel Co Ltd said Wednesday it is investing in a coke plant in Indonesia to circumvent China's stricter environmental regulations and build new capacity closer to Australia's major coking coal exporter.

The plant will have a capacity of 2.6 million tons per year, the company said in a statement on the Shanghai Stock Exchange.

China, the world's largest steel producer, produced 471.3 million tonnes of coke in 2019. But he sought to reduce excess steelmaking ingredient manufacturing capacity and closed old factories to reduce pollution.

Dalian coke futures are up more than 35% this year as Chinese capacity came under pressure.

Nanjing Iron & Steel, Tsingshan Holding Group, Shanghai Decent Investment Group and others will set up a joint venture to build a plant in Morovali Industrial Park with a total investment of $ 383.48 million, the company said.

Nanjing Iron & Steel will own 78% of the venture through its division, it said in a statement.

“Indonesia is closer to Australia, the largest exporter of coking coal, and transportation costs are relatively low,” the Chinese steelmaker said in a statement.

According to media reports in October, China stopped accepting coal shipments from Australia amid escalating tensions between the two countries.

Nanjing Iron & Steel also said that companies in Indonesia face less pressure on production capacity and less environmental restrictions than companies in China.

The Indonesian Ministry of the Environment could not be contacted for comments outside office hours.

The Chinese company said the investment is awaiting approval from both governments, adding that there is a risk that the project will be subject to anti-dumping duties in China, which currently levies such duties on coke imports.