Feud between engineering firms delays Indonesian joint venture Antam-Inalum’s alumina project till 2024

Indonesian state miners Aneka Tambang (Antam) and Inalum’s joint venture operation is delayed for two years since its US$831.5 million alumina refinery is not ready yet, as reported by the president director of the joint venture Dante Sinaga who said all this at the parliament on Monday.

On 4^th of April, 2019, PT Indonesia Asahan Aluminium (Persero) had closed the JV deal with PT ANTAM Tbk., through their joint venture subsidiary PT Borneo Alumina Indonesia (PT BAI) for inaugurating the construction of a Smelter Grade Alumina Refinery in Bukit Batu Village, Mempawah Regency, West Kalimantan.

As early as on January 6, 1976, PT Indonesia Asahan Aluminium (INALUM), a joint venture company between the Government of Indonesia and Nippon Asahan Aluminium Co., Ltd. was established in Jakarta. INALUM is to construct and operate the Asahan Project in accordance with Master Agreement. The elevation difference in Northern Sumatra’s Asahan River and Lake Toba region has been used for its hydroelectric power generation capacity since 1975. Bajradaya Sentranusa (BDSN), an Indonesia energy company, has set up a 180 megawatt (MW) hydroelectric power plant (HPP), namely Asahan I, to provide low-cost, renewable, and dependable power in Indonesia. The International Financial Corporation (IFC) supported this project through equity and debt finance. ANTAM is a vertically integrated, export-oriented, diversified mining and metals company. With operations spread throughout the mineral-rich Indonesian archipelago, ANTAM undertakes all activities from exploration, excavation, processing through to marketing of nickel ore, ferronickel, gold, silver, bauxite and coal.

Dispute between contractors appointed to build the smelter is the primary cause of delay. The state firm PT Pembangunan Perumahan (PT PP) and China Aluminium International Engineering Corp Ltd (CHALIECO),  are constantly fighting over work items and contract value, PT PP CEO Novel Arsyad declared at the same hearing.

The construction period was deliberately stretched because contractors were unable to procure the required land to erect a ‘Red Mud’ dam, for continuous disposal of the toxic industrial waste coming out of the smelter, Arsyad said.

Borneo Alumina Indonesia and the Antam-Inalum joint venture appointed both the engineering firms PT PP and CHALIECO in January 2020 to build a smelter with output capacity of one million tonnes of smelter grade alumina per year in Mempawah. The work was estimated to be complete by 2022 but now it might continue till 2024 as estimated.

Indonesia's President Joko Widodo said he wishes to stop exporting unprocessed bauxite later this year. On New Year's Eve, Indonesia banned coal exports fearing that domestic supplies were running short.