Henry BL Toruan, Ph. D, Vice Chairman of The Asahan Authority, RI Indonesia s Refineries; The Challenges Continue
The Outline The Background; Indonesian Aluminum, Alumina, and Bauxite, in perspective; Major Countries Bauxite Reserves and Productions The ban; Overview of the Indonesia Mining Industry; Will the Ban Continue The longer-run transformation in the industry
Indonesia s Bauxite, Alumina, Aluminum in Perspective Average Production per Year Bauxite Alumina Aluminum Indonesia 32.11 * 0 0.26 China 46.33 38.63 19.86 The World 254.17 101.50 48.07 Sources: Derived from Statistica, the Portal Statistics. * = average annual production till 2013 (before the ban)
Major Countries' Bauxite Reserves and Productions (millions of tons) Average of Annual Productions Reserves Indonesia 32.11 * 1,000 China 46.33 830 Australia 72.13 6,000 Brazil 32.05 2,600 Guinea 17.21 7,400 India 18.20 540 Others 36.14 9,250 World Total 254.17 27,620 Sources: Derived from Statistica, the Portal Statistics. * = average annual production till 2013 (before the ban)
The Ban Applies to All Mineral Ores; Law No. 4 was enacted in 2009, and effected January 2014. The Law requires miners to first process the ores before exporting. The aims are to promote higher value added in the industry (articles 103 and 107), and better management of the environment (article 95).
How is the Indonesian Mining Industry Progressing; Policy Credibility; In transitional years (2009-2014), miners were hesitant to start building smelters due to prior history of weak commitment of the GOI to its long-term plan n goal. The enforcement of the ban in 2014, nullify the doubt. Out of 178 planned smelters, 25 at its commisioning/operation stage, 37 at various stages of constructions, and the rest at F/S and environmental impact assessments. Some of those are alumina refineries, and one chemical grade alumina refinary already in operation.
Mineral Ores Development of Smelters and Refineries Percentage Stages # Licences 0-5 Feasibility Study 102 6-10 Environmental Impact Assessment 14 11-30 Ground Breaking 12 31-50 Middle Stage Construction 51-80 Final Stage Construction 81-100 Commissioning/Pro duction 21 4 25 Total 178 Sources: Ministry of Energy and Mineral Resources, 2014
Indonesia s Bauxite Ores in Particular Bauxite export stops, and preparation for developing refinaries started. One chemical grade alumina refinary is now in operation. Five smelter grade alumina (SGA) refineries are progressing, they are: PT. Alakasa Xinfa Group, a joint venture of local Alakasa with China s Xinfa Group Co LTD PT. Well Harvest Winning Alumina, a joint venture with China s Hongqiao and local Harita Group, originally expect to start operation by end of 2016 PT. Bintan Alumina Indonesia, a joint venture with China s Bosai, originally plan to start production in early 2017 PT. Inalum and PT Antam carry out a feasibility study for a joint venture alumina refinary project, signed an MOU. Several more projects under discussion.
A Brief Look on Alakasa-Xinfa Project; A joint-venture PT. Alakasa Tbk n Xinfa Group Co.. LTD. Alakasa, a leading aluminum manufac and trading in Indonesia, provides 120 MT of best quality bauxite reserves. Xinfa, experienced w/ latest technology in alumina refinary. Vertical Integration: Bauxite supply, Alumina Refinary, and Aluminum smelter with PT. Inalum in discussion. Completed F/S, and originally expect to start construction by the end of 2015, and production in 2017. Capacity of 2 million MT per year. Location: West Kalimantan
The Ban Will Continue For the last several months there was a government s plan to ease the ban, but has recently scrapped the plan and decided to help develop downstream industry in the mining sector. (offer tax incentives, etc) However, recently the parliament initiate amendments into the mining law. The intiative will take at least one year time, and the much talk issues to adjust are related to; Certainty on the licesence issuance central vs local gov t Formalizing the quantitative relation between export permits and stages of smelter and alumina construction
The Recently Launched Government s Policy Packages The government launched the first of its several policy packages to counter the economic slow down. The policy packages are aimed to push industrial competitiveness by; Deregulation Debureaucratization Strengthening law enforcement to increase business certainty 79 government regulations are rewritten, 154 rule are elimated, those are the ones which hinder competitiveness.
Looking Into the Future of Indonesia s bauxite-alumina-aluminum industry Exports of Indonesia s Bauxite will continue to be disappeared. Indonesia s alumina production will likely enter the global market in 2018-2020 Indonesia with bauxite mining capacity of 30 millions tpy, will supply approximately 7,5 millions tpy of alumina The only Indonesian aluminum smelter, Inalum, will produce 400 500 thousands tpy aluminum by 2020 New aluminium smelters will emerge, considering a rise in demand for aluminium
A Glance at Recent Indonesian Economy, (in billions USD and percentages) 2010 2011 2012 2013 2014 2015* GDP 710 846.7 879 869 917.4 966 Export 157.8 203.5 190 182.6 184.5 Import 135.7 177.4 191.7 186.6 190.7 Trade Balance 22.1 26.1-1.7-4.0-5.2 CA Balance 5.1 1.7-24.4-29.1-3.2-2.5 Growth 6.2 6.5 6.3 5.8 5.02 5.3 Sources: Derived from BPS Data * estimated number n subject to change
Selected Industries Contribution to Indonesia s Economic Growth Industries 2013 2014 Mining and Quarrying Agriculture, Livestock, Forestry and Fishery 0.1 0.05 0.45 0.56 Manufacturing 1.42 1.01 Other Sectors 3.81 3.40 GDP Growth 5.78 5.02 Source: Derived from BPS Data
Summary The Ban on exporting bauxite ores will sustain. Indonesia to continue build refineries and smelters in the years to come Prices of bauxite, alumina, and aluminum will eventually rise, and will induce more investments in the industry Indonesia s alumina and aluminium industry will enter the global market...
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