Coordinating Minister of Maritime Affairs Luhut Binsar Pandjaitan - Photo: the Ministry.

JAKARTA (TheInsiderStories) – Indonesia has the sixth-largest bauxite reserves in the world and the government sees the potential of bauxite downstream could reach US$13 billion next year from the current $9 billion, coordinating minister for maritime and investment affairs Luhut Binsar Pandjaitan said on Wednesday (11/13).

“Indonesia is the top six bauxite reserves in the world, but we only export it. I have received a direct order from President Joko Widodo to tighten downstream efforts. This is so that the Indonesian mining industry can get added value,” he said.

The minister went on to say if bauxite is processed into various derivatives, the value can increase up to 11 digits. This potential has not been maximized.

“If for example, we exported $400 million previously, this year we have started $9 billion, next year we are targeting $13 billion and so on, because of the supply chain,” he explained.

Therefore, the government will consider accelerating an export ban on bauxite and other mineral items such as tin, and alumina, among others, subject to the scale of investment, Pandjaitan said. Under the current rules, exports of bauxite are allowed till January 11, 2022.

“Later on, if we already have investors coming in for downstream in bauxite and others like tin, asphalt, alumina, and so on, why not?” he said, adding his party in talks with several firms who are interested in investing in bauxite processing plants, including with Japanese companies.

Furthermore, the minister encouraged the development of the bauxite processing industry to be accelerated. It includes PT Indonesia Asahan Aluminum in collaboration with PT Aneka Tambang Tbk (IDX: ANTM) via its subsidiary PT Borneo Alumina Indonesia (PT BAI), which built the bauxite processing industry into alumina in Mempawah, Kalimantan West.

The project will reduce exports of raw minerals and simultaneously dependence on imports of raw materials for aluminum production, Pandjaitan said.

“The development of the bauxite processing industry into alumina will also encourage the birth of other investment potentials in the future, for example in the form of developing industries related to alumina-based aluminum and its diversification,” he added.

The project is built on an area of ​​288 hectares, has an initial capacity of 1 million tons per year. This project will also be equipped with a 3×25 megawatt coal power plant. The project investment is estimated to reach $850 million and is targeted to start production in early 2022.

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