Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif recently unveiled plans for the continuation of the bauxite smelter project by PT Indonesia Asahan Aluminium (Inalum), which is targeted to be completed by 2027. This announcement came following a closed-door meeting with President Joko “Jokowi” Widodo at the State Palace on Monday, February 5, 2024.
“We are planning to build a smelting facility, with processing facilities at Inalum. The plan is to have it completed by 2027,” he told reporters on Monday.
Arifin emphasized that the smelter project would require electricity supply from clean energy sources. The electricity needs of the smelter are expected to be fulfilled by State-owned electricity company PT PLN.
He, however, declined to provide further details regarding the project, including its location and the estimated cost of building the new smelter.
Finance Minister Sri Mulyani Indrawati has remained cautious when asked about potential capital injections for the project. “We will see,” Sri Mulyani remarked.
Inalum is currently completing the bauxite smelter project to produce alumina, known as the Smelter Grade Alumina Refinery (SGAR) Mempawah Phase 1 in West Kalimantan. Construction progress has reached 80 percent as of December 2023, with the first alumina production targeted for the third quarter of 2024.
SGAR Mempawah Phase I, with an investment value of US$831.5 million, is expected to increase smelter grade alumina (SGA) production capacity to 1 million tons, with an upstream bauxite absorption capacity of 3 million tons.
Furthermore, Inalum plans to proceed with Phase II of SGAR Mempawah, potentially increasing alumina production capacity to 1 to 2 million tons in the future. The investment requirements for the second phase are expected to be similar to Phase I. Inalum is currently conducting a beauty contest to select strategic partners for the joint venture in the development of the second phase.
Previously, the government removed the SGAR Mempawah project from the national strategic project list through the issuance of Ministerial Regulation No. 9/2022 in late July 2022. This decision was made due to delays caused by disputes between the consortium members of the Engineering, Procurement, and Construction (EPC) contract, which is 75 percent controlled by China’s state-owned enterprise China Aluminium International Engineering Corporation Ltd. (Chalieco) and the remaining 25 percent by PT Pembangunan Perumahan (PP).
The strategic project for bauxite ore refining is managed by PT Borneo Alumina Indonesia BAI), with majority ownership held by Inalum (60 percent) and the remaining 40 percent by PT Aneka Tambang (Antam).
The SGAR Mempawah project has been reinstated as a national strategic project.
