By Dominikus
Qingdao Zhongzi Zhongcheng Group Co., Ltd. has announced its intention to enter into a related party transaction through its wholly-owned subsidiary, PT Transon Jasa Angkutan (TJA). The company is set to sign a "Docking and Unloading Entrustment Contract" with PT Metal Smeltindo Selaras (MSS), a company engaged in the smelting of nickel iron ore, as part of its supporting services for the Qingdao Indonesia Comprehensive Industrial Park, located in Laronae Village, Bungku Pesisir District, Morowali Regency, Central Sulawesi Province.
According to MSS Chairman Yuan Dezhiao's report on Friday (28 March), the agreement aims to provide cargo loading and unloading services for MSS's ferronickel smelting operations, which are essential to the park's operational needs. The total handling volume is expected to reach up to 4.59 million tons of bulk cargo and 12,000 tons of general cargo annually, depending on MSS’s production and procurement plans. The estimated annual service fees for the contract could amount to approximately US$9.4 million (RMB 64.98 million), although the final fee will depend on actual settlement between the two parties. MSS, which is indirectly controlled by Qingdao Urban Construction Investment (Group) Co., Ltd. (Urban Construction Group), is considered a related party of Qingdao Zhongzi Zhongcheng, making this transaction subject to disclosure and approval under the Shenzhen Stock Exchange’s regulations.
The contract will be effective from April 1, 2025, through March 31, 2028. Payment terms are in Indonesian Rupiah, with monthly settlements based on the agreed fees, calculated at a rate of $8.7 per ton for general cargo and $2.0 per ton for bulk cargo. The settlement rate will be aligned with the exchange rate announced by Bank Indonesia.
Read also: Qingdao completes phase 1 of MSS nickel smelter project
MSS's unaudited financial figures for the 2024 fiscal year and January 2025 show significant financial challenges, with operating revenue of $21.5 million (RMB 146,925,010), a total loss of $10.3 million (RMB -72,703,630), and net loss of $10.3 million (RMB -72,703,630). The company's total assets stand at $71.8 million (RMB 495,474,110), with total liabilities at $69.6 million (RMB 480,482,770) and owner's equity at $2.2 million (RMB 14,991,350). These figures highlight MSS's ongoing financial struggles as it continues to ramp up its ferronickel production.
Qingdao Zhongzi Zhongcheng's board of directors, along with independent directors, have reviewed and approved the transaction, which is expected to enhance the operational efficiency of the Indonesia Industrial Park while securing fair and reasonable pricing. The board believes this agreement will positively impact the company’s financial performance in 2025. The transaction aligns with the company’s strategy to support infrastructure and service expansion within the Indonesian market, particularly in the ferronickel sector, without compromising the company's independence or the interests of its shareholders, including minority investors.
In a related note, since the beginning of 2025, the company has engaged in related transactions with MSS and its affiliates for a total of approximately $34,000 (RMB 239,460). This deal further underscores Qingdao Zhongzi Zhongcheng’s efforts to enhance its presence in Indonesia’s industrial sector, building on the success of the Qingdao Indonesia Comprehensive Industrial Park and fostering continued business growth.
MSS utilizes RKEF technology, with production capacities of 4x33 MVA and 4x39 MVA, along with a 2x65 MW power plant. The target production is set at 600,000 tons per year.
Editing by Reiner Simanjuntak
