Indonesia’s Inalum and ANTAM to Invest US$850 M to Produce Alumina
President Director of Inalum Budi G. Sadikin and Staff at the event of the launching of SGAR development in Sungai Kunyit, Mempawah, West Kalimantan. Photo by The Agency.

JAKARTA (TheInsiderStories)PT Indonesia Asahan Aluminum (Inalum) and PT Aneka Tambang Tbk (IDX: ANTM) have started the construction of bauxite ore to alumina processing smelter project in Sungai Kunyit, Mempawah, West Kalimantan.

The project investment is estimated at US$850 million and is equipped with a steam power plant of 3×25 megawatts, said an official statement on Thursday (04/04).

According to President Director of Inalum Budi G. Sadikin, the two companies formed a joint venture subsidiary of PT Borneo Alumina Indonesia (BAI) to run the project. With this project, he said, Inalum, which has the only aluminum refining plant in Indonesia, will get a supply of alumina and made savings $200 million.

Sadikin explained, through PT BAI, the construction of the Smelter Grade Alumina Refinery will begin soon. This smelter with an initial capacity of 1 million tons per year is expected to be able to operate early 2020.

“As a company with significant bauxite resources, we seeks to realize the added value of its mineral commodities,” said ANTM’ CEO Arie Prabowo Ariotedjo.

The construction of this smelter is expected to reduce exports of raw minerals and reduce dependence on imports for sources of raw materials for aluminum production.

Indonesia has the sixth largest bauxite reserves in the world. However, until now Indonesia does not have a bauxite processing plant to become alumina so that all bauxite ore is exported abroad, namely Japan and China without being processed into more efficient products.

Conversely, alumina as raw material for aluminum production must be imported by Inalum from other countries such as Australia, China and India.

Unfortunately, alumina imported from Australia is made from bauxite which is mined in West Kalimantan. Indonesia exports bauxite at a price of $25-$30 per ton, then buys it back in the form of alumina at a price of $300-$350 per ton.

According to economic calculations, Indonesia lost 8 times. More fatal, the added value of alumina production is only enjoyed by Australia.

Minister of State-Owned Enterprises Rini Soemarno on the same occasion said the project was an advance for the domestic mining industry. Previously, Indonesia sent bauxite to other countries to be processed and sent back to Indonesia.

“We are determined to maximize added value of bauxite and other mining materials in the country,” Rini said.

The alumina plant construction project to be managed by BAI is built on an area of ​​288 hectares in three villages in Mempawah Regency, West Kalimantan. The smelter that processes bauxite to alumina is projected to increase the value added by up to 16 times.

Previously, Inalum and ANTM also formed a partnership with Aluminum Corporation of China Ltd (Chalco) from Hong Kong to build a SGAR in Mempawah Regency, West Kalimantan.

The cooperation was stated in the signing of an agreement at the IMF-World Bank 2018 Annual Meetings in Nusa Dua, Bali, in October by Inalum Managing Director Oggy A. Kosasih with Chalco Hongkong President Director Li Wangxing.

The mining industry holding was officially formed on Nov. 27, 2017 where Inalum became the holding company of holding and PT Aneka Tambang Tbk., PT Bukit Asam Tbk (IDX: PTBA), PT Timah Tbk (IDX: TINS), and PT Freeport Indonesia as holding member.

The details, Inalum holds 65 percent of the shares, ANTAM 65.02 percent shares, Bukit Asam Tbk 65 percent shares, and 51.2 percent shares of Freeport Indonesia.

As of mid-2018, Inalum managed to book consolidated revenue (audited) of Rp30.1 trillion, or grew 59 percent from the previous year. While consolidated EBITDA reached Rp9.2 trillion, or grew 92 percent from 2017. The consolidated net income reached Rp5.3 trillion or grew 174 percent from 2017.

Written by Daniel Deha, Email: