Several bauxite mining companies are suspending its production following the recent export ban on bauxite by the government. Bauxite produced by mining companies are being stockpiled and cannot be processed further by smelters.
Bauxite export ban backlash
Bauxite mining operations have come to a halt following President Joko Widodo’s ban on the export of bauxite on June 10, 2023. Several companies are currently stockpiling their bauxite mining products in warehouses.
Ronald Sulistyanto, the Acting Chairman of the Indonesian Bauxite and Iron Ore Entrepreneurs Association (APB3I), stated that bauxite mining was suspended because the existing four smelters in Indonesia can only absorb 13.9 million tons of bauxite per year.
Meanwhile, the bauxite mining production capacity has reached 30 million tons per year, leaving 16 million tons of bauxite unabsorbed by the smelters.
“We have approximately 16 million tons of idle stock. They cannot be sold, so they are just being stockpiled,” Sulistyanto said on Friday, June 16, 2023.
Sulistyanto further added that bauxite industry players are currently facing a period of stagnation. The ban on bauxite exports is seen as the closing off of all opportunities for mining industry players to profit from the mineral.
“Where can we sell the product? The existing market already has partners,” Sulistyanto explained.
He also criticized the suspension of bauxite exports, stating that it contradicts the spirit of mineral downstreaming frequently promoted by President Joko Widodo. Additionally, the government’s efforts to attract new investors in the industry have been minimal.
“There have been no efforts to attract investors through this export ban. Investors are running away,” Sulistyanto lamented.
Government response
The Ministry of Energy and Mineral Resources (ESDM) claimed that the input capacity of the four existing smelters is sufficient to absorb the entire domestic bauxite production.
Therefore, the ministry has requested bauxite producers to deliver their mining outputs to four companies that own private smelters. These four companies are PT Indonesia Chemical Alumina, PT Bintan Alumina Indonesia, PT Well Harvest Winning Alumina Refinery Line-1, and PT Well Harvest Winning Alumina Refinery Line-2.
The smelters owned by PT Well Harvest Winning Alumina Refinery and PT Bintan Alumina Indonesia are bauxite ore processing plants that produce smelter grade alumina (SGA). These smelters, with an input capacity of 12.5 million tons of bauxite ore, can produce 4 million tons of processed bauxite annually.
Additionally, the smelter owned by PT Indonesia Chemical Alumina has an input capacity of 750,000 tons of bauxite ore, resulting in a bauxite production of 300,000 tons. Furthermore, PT Indonesia Asahan Aluminium operates one smelter for further processing of bauxite ore into aluminium ingots and billets. This smelter has a production capacity of 345,000 tons.
