Jakarta, Dec. 8 (Reuters): National Aluminium Company (Nalco) plans to sign a memorandum of understanding in January with the Indonesian government to build a smelter on Sumatra island, a senior official at the industry ministry said late on Friday.

For the initial phase, the company plans to build an aluminium smelter in South Sumatra province with a capacity of 250,000 tonnes a year, said I Putu Suryawirawan, director of metal at the industry ministry.

The smelter’s capacity will be doubled to 500,000 tonnes a year, which will need a total investment of $3 billion, he added.

“After signing the MoU, Nalco will conduct a feasibility study on the project,” said Suryawirawan.

He added that alumina, a raw material for the smelter, will be supplied from India. Nalco’s project will be another fresh investment in aluminium processing in the country.