Indonesia Asahan Aluminium, the country’s only aluminium producer, is undergoing a major transformation. The company aims to double its aluminium production capacity to 500,000 tonnes per annum by 2020, and to one million tonnes by 2025. It further intends to take control of its supply chain thereby reducing dependence on imports of alumina. The projects in pipeline may cost the around US$3.5 billion.
Inalum, as the wholly-owned government sector company is known, has been keen on scaling its production as it is now capable of meeting only one third of domestic aluminium demand, estimated at 800,000 tonnes per year.
The construction of a second smelter, with a projected production capacity of 200,000 tonnes, will cost US$700 million approximately. Inalum plans to erect a hydro power plant for the smelter with a capacity of 800 megawatts. It may cost an additional $1 billion (if not more). A new location in the northeast of Kalimantan has been identified as the proposed site for the project.
As per Inalum officials, such projects failed to take off in the past due to commodity market downturn and a lack of investor interest. The company is now reviving its plans after it was appointed as a holding company with a 65 per cent stake in each of the three publicly-listed state miners.
The scheme will help the Indonesian government to gauge whether it can take the development of its minerals and metals industry in its own hands.
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