The Indonesian government continues to demonstrate its commitment to advancing the mineral downstream industry by implementing a bauxite ore export ban. This step is part of a broader strategy to increase the added value of Indonesia’s natural resources, previously exported in raw form, and is expected to strengthen the national economic structure by enhancing the competitiveness of domestic industries. One of the key pillars of this policy is the development of the alumina industry, marked by the construction of the Smelter Grade Alumina Refinery (SGAR) in Mempawah, West Kalimantan. This export ban took full effect in June 2023, as outlined under Law No. 3 of 2020.
The SGAR Mempawah project, which is part of the National Strategic Project, is managed by PT Borneo Alumina Indonesia (PT BAI), a joint venture between two state-owned enterprises, PT Indonesia Asahan Aluminium (Inalum) and PT Aneka Tambang Tbk. This project is projected to be a key driver in meeting Indonesia’s domestic aluminum needs, which have long relied on imports. Currently, Indonesia’s aluminum demand is estimated at 1 million tons per year, while the production capacity of existing bauxite smelters in the country is only around 250,000 tons per year. Therefore, the presence of SGAR Mempawah is crucial to reducing dependence on imports and strengthening the self-sufficiency of the national aluminum industry.
The alumina produced from SGAR Mempawah will be distributed to Kuala Tanjung, where an aluminum smelting plant is ready to process it into finished aluminum. In addition to meeting domestic aluminum needs, this project is also expected to play a strategic role in supporting the development of the electric vehicle (EV) battery industry. Indonesian Government has emphasized the importance of integrating the domestic EV industry from upstream to downstream as part of efforts to achieve greater efficiency and sustainability in this highly promising sector.
With the project slated for completion in September 2024 and targeted for Commercial Operation Date (COD) in February 2025, SGAR Mempawah is expected not only to boost domestic alumina production but also to be a key driver in creating a sustainable industrial ecosystem in Indonesia.
The bauxite export ban marks an important step for the government in creating greater added value from Indonesia’s natural resources. Mineral down streaming, particularly in the aluminium industry, is a strategic step toward achieving industrial self-sufficiency and minimizing reliance on imports. With the realization of the SGAR Mempawah project, there is great hope that Indonesia can emerge as a key player in the global aluminium and EV battery industries, paving the way for more inclusive and sustainable economic growth in the future. The success of this project is also expected to serve as a model for the development of other mineral downstream industries, further strengthening Indonesia’s economic foundation towards a more self-reliant and competitive future on the global stage.
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Author:
Dewi Susanti