PT PP Tbk (IDX: PTPP) and China Aluminum International Engineering Corporation Ltd. (Chalieco) have signed a US$850 million contract to build Mempawah alumina refinery in West Kalimantan province - Photo by PTPP.

JAKARTA (TheInsiderStories) – Indonesian developer, PT PP Tbk (IDX: PTPP) and China Aluminum International Engineering Corporation Ltd. (Chalieco) have signed a US$850 million contract to build Mempawah alumina refinery in West Kalimantan province, the company said recently. The refining plant is targeted to be operational in 2022 where it will produce one million tons of aluminum annually.

Indonesia now has the only Ketapang alumina refinery in West Kalimantan, which is owned by China – Indonesia joint venture Well Harvest Winning. It has an annual capacity of one million tonnes. The other eight refineries capable of producing 8.73 million tonnes are being built and slated for completion next year.

The contract was signed between PTPP, Chalieco and PT Borneo Alumina Indonesia (BAI) in Beijing on January 11. BAI is a joint venture between the Aluminum Corporation of China Limited (Chalco), the state-owned aluminum producer PT Indonesia Asahan Aluminium (Inalum) and the state-owned mining company PT Aneka Tambang Tbk (IDX: ANTAM) located in Bukit Batu Village, West Kalimantan.

In the signing ceremony, the company was represented by Abdul Haris Tatang as the operations director of the company’s and accompanied by Nurlistyo Hadi as Head of the EPC Division to sign the cooperation contract.

“For this smelter project, we are working with China Aluminum International Engineering Corporation Ltd., acts as a contractor who will also be responsible for the completion of the project,” Tatang said in an official statement, hoping this will reduce Indonesia’s dependence on imported raw materials while increasing added value for Indonesian mining commodities.

This project is proof that Indonesian state-owned enterprises are contributing significantly to national development and in line with the spirit of change that is being promoted by the government, Tatang adds.

This year, PTPP has ready to spends Rp7.5 trillion ($535.71 million) on capital expenditure. The amount higher than Rp6.5 trillion allocated in 2019. Its CEO, Lukman Hidayat, elaborated that capital expenditure will be derived from retained earnings, dividends from the subsidiaries, bank loans, and equity. The company also looking at the bond market to fulfill the needs in 2020, but it’s still undecided on time and value.

He continued, the investment will be used to finance several projects that have been in the pipeline for this year. The constructor also expects to win several tenders, so it will support the contract of Rp45 trillion.

US$1=Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com