Inalum plans to expand its Kuala Tanjung aluminium smelter in 2024

In the vibrant landscape of 2024, PT Indonesia Asahan Aluminium (Persero), also called Inalum, is poised to unfurl the sails of innovation on two grand ventures. With a resounding declaration, CEO Danny Praditya has illuminated the corporate horizon, announcing the Final Investment Decision (FID) to expand an aluminium smelter nestled in the heart of Kuala Tanjung, North Sumatra.

Concurrently, the symphony of progress will crescendo with the initiation of the second act in the Smelter Grade Alumina Refinery (SGAR) saga, set against the lush backdrop of Mempawah in West Kalimantan.

In the unfolding chapters of progress, the aluminium smelter in Kuala Tanjung is gearing up for an impressive capacity of 600 thousand tonnes. Simultaneously, the Smelter Grade Alumina Refinery (SGAR) in Mempawah is gearing up for a substantial escalation, catapulting its annual alumina production capacity from 1 million to an impressive 3 million tonnes.

Danny Praditya also unveiled a visionary outlook, predicting a surge in Inalum's aluminium production from 250,000 to a finely tuned 274,140 tons by 2024. This remarkable upswing is rooted in Inalum's strategic collaboration with the illustrious United Arab Emirates-based enterprise, Emirates Global Alumina (EGA).

The Indonesian government is pinning its hopes on Inalum to spearhead the downstream initiative, converting bauxite ore into alumina, a critical component for diverse industries. This strategic move aims to maximise benefits by processing bauxite domestically rather than exporting low-value ore.

To enforce this direction, the government, on June 10, 2023, imposed a ban on bauxite ore exports and implemented a domestic market obligation for bauxite to meet smelter requirements. Consequently, the domestic bauxite supply is set to soar, necessitating the establishment of high-capacity smelters for efficient alumina production.

As of the end of 2023, national aluminium production has only reached 250 thousand tonnes, with Inalum being the primary contributor. However, Indonesia's aluminium demand surged to 1 million tons, leaving a substantial gap of 750 thousand tonnes to be filled through imports. The Industry Ministry has set an ambitious target for national aluminium production to hit 2 million tonnes by 2025, contingent on the operation of multiple large-scale smelters and factories.

Indonesia boasts only four alumina smelters, falling significantly short of the ideal 12 units required to handle the anticipated annual national bauxite production of 58 million tonnes. The delay in these smelters' operations poses a dual challenge: bauxite miners cannot export the commodity, leading to potential losses, while the anticipated smelters to absorb the bauxite remain unavailable. In response, the government is exerting pressure on Inalum to expedite the completion of its extensive smelter project, particularly in light of the escalating domestic and international demand for aluminium.