Jakarta, CNBC Indonesia – RI President Joko Widodo (Jokowi)’s step to speed up the bauxite processing and refining industry (smelter) to become aluminum is not without reason. This is because the state can benefit many times over with this downstream process.
President Director of PT Indonesia Asahan Aluminum (Inalum) Danny Praditya explained that there is added value if bauxite is sold in the form of alumina to become aluminum. Based on company calculations, for example, 1 ton of bauxite is currently valued at around US$ 24-31.
As for 1 ton of bauxite can produce 0.30 tons of alumina whose value can reach US$ 118.8 or experience a value increase of up to 3.8 times. It doesn’t stop there, an increase in added value is obtained again if alumina is reprocessed into aluminum.
At least, 0.3 tons of alumina produced can produce 150 kg of aluminum worth US$ 465. This product has increased by 4.1 times from the previous product.
“Now, the multiplier value is from US$ 118.8 to US$ 465. The price of 1 ton of aluminum is approximately US$ 2,200, last year it reached US$ 2,700. We can see this if we can take advantage of bauxite ore production in Indonesia, we will get significant added value,” said Danny in a hearing with Commission VII, quoted Friday (25/8/2023).
On the other hand, world demand for aluminum will grow by 2.5% by 2028 with a projected global secondary consumption of 36 million tons in 2028, with a share of 30% of total aluminum globally.
Meanwhile, from the supply side, carbon emission factors will also play an important role. In the long term, it is projected that Indonesia will become the fifth largest aluminum supplier country in the world.
“This also deserves close attention because secondary (recycled) aluminum is considered greener because it has lower energy intensity than primary aluminum,” added Danny.
However, his party also sees that demand for primary aluminum consumption in Indonesia is still dominated by aluminum needs in the transportation (including EV ecosystem development), building/construction, and electrical industry sectors.
“This is a recap of the potential for aluminum both domestically and globally, this is the trigger that Inalum must take advantage of the momentum to increase capacity and grow sustainably,” said Danny.
Therefore, Inalum’s aluminum production in 2027 is expected to increase gradually to 900 thousand tons per year. This follows an increase in the company’s production capacity through upgrading pots, pot optimization, and the Kuala Tanjung (Brownfield 1) smelter expansion.
Previously, Special Staff to the Minister of Energy and Mineral Resources (ESDM) for the Acceleration of Mineral and Coal Management Irwandy Arif said that the potential for additional state revenue could accelerate up to eight times from downstream bauxite to alumina.
Based on his records, in 2021 the price of bauxite ore will be at the level of US$ 24-30 per ton or around IDR 469,323 per ton. This contributed to state revenues of US$ 628 million or equivalent to Rp. 9.8 trillion (assuming an exchange rate of Rp. 15,646 per US$) with sales of 23 million tons of bauxite ore.
Meanwhile, if alumina is sold in the form of alumina, state revenue is expected to skyrocket eight times, assuming the current alumina price is around US$ 200 – US$ 300 per tonne.
Assuming sales are of the same volume, state revenue will increase to US$ 5 billion or around Rp 79 trillion.
“With the price of bauxite ore being around US$ 24-30 per ton yesterday in 2021. We sold around 23 million tons of it for around US$ 628 million. That is such a way, so this figure will skyrocket if we succeed in turning alumina from ore bauxite in the alumina grade bauxite smelter process,” he explained in the CNBC Indonesia Mining Zone program, some time ago.
“This selling price can be around US$ 200-300 per ton. You can imagine eight times, more or less,” he said.
According to him, this value can be boosted again if Indonesia processes alumina into aluminum. Moreover, the price of aluminum has now reached the level of US$ 2,000 per ton.
“Then, what’s more, alumina is processed into aluminum, the selling price shot up to US$ 2,000 per ton. So we can imagine how this will affect state revenues,” he said.
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