JAKARTA, Feb. 15 -- A unit of Russia's Solway Industries plans to invest up to $3 billion to build a nickel smelter with a 150,000 metric tons of annual capacity in Halmahera Island in Indonesia, an Indonesian senior official said Monday.

"It plans to build the smelter this year, we expect groundbreaking in the first half," Gita Wirjawan, the head of Indonesia's investment agency board, told Dow Jones Newswires.

According to Solway's website (www.solwaygroup.com), it has several exploration areas in Indonesia, including in Halmahera Island in the eastern part of Indonesia where its known resources amount to 114 million tons of ore with 1.7% nickel grade.

Indonesia, which boast natural resources such as coal, palm oil, cacao, rubber, tin and nickel, is requiring miners by 2014 to carry out minimum processing before exports, in a bid to increase its exports revenue.

Southeast Asia's biggest economy currently produces ferro-nickel from three nickel smelters operated by the state-controlled Aneka Tambang (ANTM.JK).