The fate of downstream bauxite is different from that of nickel, it is the culprit

Jakarta, CNBC Indonesia – The Ministry of Energy and Mineral Resources (ESDM) said the development of bauxite processing and refining facilities (smelters) in Indonesia still faces obstacles. This can be seen in the progress which is not yet significant compared to downstream nickel.

Director General of Minerals and Coal (Dirjen Minerba) of the Ministry of Energy and Mineral Resources, Tri Winarno, believes that developing a bauxite smelter has its own challenges. One of them is the low rate of return on investment (IRR), which makes companies think twice before investing.

“If there is a problem, Compared to nickel, the IRR is relatively lower than that of bauxite. “So the return on capital is quite good, that's absolutely true,” Tri said when meeting at the Ministry of Energy and Mineral Resources building, quoted Friday (11/15/2024).

Separately, when asked about the possibility of forming a consortium for companies that are not yet able to build their own foundries, Tri said that this option is not currently a priority. But what is certain is that his party remains focused on current projects.

“We will focus first on what is in progress, while moving further downstream. The goal is to go downstream to the final product,” he said.

Earlier, former Minister of Energy and Mineral Resources (ESDM), Arifin Tasrif, encouraged bauxite entrepreneurs to form a consortium to carry out the construction of processing and refining facilities (smelters).

This follows progress on the construction of a bauxite smelter project in the country which is yet to show significant results due to financing constraints. “If this is the case, there may not be a solution, so join us. (Create a consortium) if you can. This is just a suggestion,” Arifin said during his meeting at the Ministry of Energy and Mineral Resources building, Friday (2/2/2024).

Arifin revealed that out of the project to build 12 bauxite smelters in the country, only 4 smelters are already in operation. The remaining 8 bauxite smelter projects are still under construction.

In fact, based on field observations, there are very significant differences with the results of independent verifiers. Field results show that of the 8 smelter projects, 7 smelter sites are still open fields.

“Even though it is stated in the verification results report, it is demonstrated that the development progress has reached a range between 32% and 66%,” Arifin said in a joint working meeting with Commission VII DPR RI, Wednesday (24/5/2023).

Here are 8 companies that have not yet completed construction of their foundry projects:

1. PT Quality Sukses Sejahtera is located in Kec. Tayan Hilir, Kab. Sanggau, West Kalimantan with the company's planned investment in this project of US$484.3 million.

2. PT Dinamika Sejahtera Mandiri is located in Kec. Toba, Kab. Sanggau, West Kalimantan with an investment plan of $1.2 billion.

3. PT Parenggean Makmur Sejahtera is located in Kec. Campaga & Cempaga Hulu, Kab. East Kotawaringin, Central Kalimantan with an investment plan of US$509 million.

4. PT Persada Pratama Cemerlang is located in Kec. Méliau, Kab. Sanggau, West Kalimantan with an investment plan of $474 million.

5. PT Sumber Bumi Marau is located in Kec. Marau and Upper Barley, Kab. Ketapang, West Kalimantan with an investment plan of $550 million.

6. PT Kalbar Bumi Perkasa is located in Kec. Tayan Hilir, Kab. Sanggau, West Kalimantan with an investment plan of $1.58 billion.

7. PT Laman Mining is located in Kec. Matan Hilir Utara, Kab. Ketapang, West Kalimantan with an investment plan of 1.05 billion US dollars.

8. PT Borneo Alumina Indonesia Kab. Mempawah, West Kalimantan, with an investment plan of $831.5 million.

(pgr/pgr)

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