JAKARTA, NNC - Mining Industry Holding Company (HIP) PT Inalum (Persero) together with HIP member PT Antam Tbk (IDX:ANTM) and the world's second largest alumina producer from China Aluminum Corporation of China Ltd. (Chalco) is going to work together to conduct mining product downstream in Mempawah Regency, West Kalimantan.
Through PT Borneo Alumina Indonesia (BAI), the three companies will work together to build a refinery to process bauxite into alumina, which is the main raw material for making aluminum ingots. Inalum is the only aluminum ingot producer in Indonesia and will later absorb most of the alumina from BAI.
"Alumina is the main raw material for producing aluminum ingots. With Inalum's production capacity of 250 thousand metric tons of aluminum ingot per year, it requires 500 thousand metric tons of alumina. Currently, these needs are still supplied from abroad," said Executive Director of Inalum Oggy A. Kosasih.
"With the completion of this project, Inalum will release dependence on supplies from abroad and reduce foreign exchange imports by around USD600 million. And equally important, this project will provide added value of bauxite which has been exported in the form of ore and build a sustainable integrated aluminum industry."
The cooperation between the three companies was stated in the signing of the agreement on October 11, 2018 at the Indonesia Investing Forum 2018, 2018 IMF-World Bank Annual Meetings in Nusa Dua, Bali. The signing of the project collaboration with the technical name Smelter Grade Alumina Refinery (SGAR) was carried out by Oggy A. Kosasih with Chalco Hong Kong President Director Li Wangxing.
The construction of the SGAR project is carried out in two phases with a total production capacity of two million metric tons of alumina. The groundbreaking of the first stage of refining plant with a capacity of one million metric tons is planned to be carried out in the fourth quarter of 2018 and is expected to begin production in 2021.
The investment to build the Phase 1 plant is estimated at around USD850 million.
In addition to CHALCO's reputation as the number one alumina producer in China and number two in the world, the company has proven experience in running the integrated aluminum industry from bauxite to downstream aluminum products. CHALCO also has efficient technology with low operating costs and is experienced in operating the SGAR plant.
The effort to downstream the mining industry to create added value is one of the three mandates of HIP formation in addition to controlling Indonesian mining resources and becoming a world-class company.
HIP has also become one of the backbones of the country in gaining foreign exchange from exports and reducing dependence on raw materials from imports. HIP estimates that export sales until 2018 amount to USD2.51 billion or around IDR37 trillion. As for August 2018, USD1.57 billion has been realized or 62.5 percent of the projection.