Australian firm Indo Mines is planning to start construction of its $1bn iron ore project, located in Java, an island of Indonesia, in December 2011.

Mudrajad Kuncoro, a local government official in Yogyakarta, central Java said the ministry is expected to issue the permit in November to Jogja Magasa Iron, which will own a 30% stake in the project.

The project will also include a processing plant with production capacity of one million tons of pig iron and two million tons of iron concentrate a year and a coal-fired power plant.

The project will also include an oxygen plant, water treatment facility and a port.

Once operational in three to five years time, the project is expected to produce nine to 15 million tons of iron ore a year and will consume around 1.2 million tons of coal annually, reports Reuters.