Jakarta, Indonesia Sentinel — Indonesia is currently constructing a alumina production facility in Mempawah, West Kalimantan. The Smelter Grade Alumina Refinery (SGAR), a facility that will process bauxite into alumina, was built with a Phase 1 investment valued at approximately $900 million, equivalent to Rp13.96 trillion. The project is being managed by PT Borneo Alumina Indonesia (BAI), a joint venture between PT Indonesia Asahan Aluminium (Inalum) and PT Aneka Tambang Tbk (ANTM).
Leonard M. Manurung, CEO of PT BAI, emphasized the sustainable economic impact the refinery will have on the Mempawah region and the broader national economy.
“The presence of PT Borneo Alumina will generate jobs and drive economic growth by increasing the demand for goods and services, including local suppliers of materials and labor. This will be a catalyst for regional economic development,” Manurung said as reported by CNBC Indonesia Friday, October 18, 2024.
Manurung also highlighted that the refinery will significantly contribute to West Kalimantan’s economic growth. The mining sector already accounts for 15.38% of the region’s Gross Regional Domestic Product (GRDP), a figure expected to rise once the facility reaches full operational capacity, projected for early 2025.
“This processing industry is set to play a substantial role in West Kalimantan’s economy. When Borneo Alumina operates at full capacity, it will have a significant impact on regional economic growth,” he added.
A key component of this economic boost is employment, with a strong emphasis on hiring local workers.
“We are prioritizing local talent for jobs at the refinery. Through our Corporate Social Responsibility (CSR) programs, we are committed to developing the skills of the local community to ensure they can be employed by PT BAI,” Manurung explained.
According to Indonesia’s Central Statistics Agency (BPS), about 5% of the workforce in West Kalimantan, which totals 2.7 million people, is employed in the processing sector. This translates to roughly 135,000 people working in industries like alumina processing, a number expected to increase as the refinery ramps up production.
Smelter Grade Alumina Refinery (SGAR) in Mempawah, West Kalimantan
The Smelter Grade Alumina Refinery (SGAR) Mempawah Phase 1 facility was inaugurated on September 24, 2024, by President Joko Widodo. The smelter will have an annual production capacity of 1 million tons of alumina, linking the supply chain between bauxite ore mined by PT Aneka Tambang Tbk in West Kalimantan and the Inalum aluminum smelter in Kuala Tanjung, North Sumatra.
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The injection of bauxite ore into the refinery marks the initial step in the alumina production process, with the first output expected in November 2024. Commissioning and production will gradually increase until December 2024, with full-scale production slated for the first quarter of 2025. The Commercial Operation Date (COD) for the facility is targeted for late February 2025.
Following Phase 1, the SGAR project will advance to Phase 2, with another 1 million tons of alumina production capacity expected to come online by 2028. Once both phases are operational, domestic alumina production will double to 2 million tons per year, consuming up to 6 million tons of bauxite annually.
This increased of alumina production aligns with Inalum’s corporate strategy to expand its aluminum production capacity to 900,000 tons per year.
Currently, Inalum’s smelter produces 275,000 tons of aluminum annually, which is prioritized for domestic use. However, Indonesia’s domestic aluminum demand has reached 1.2 million tons per year, with 56% of supply in 2023 coming from imports and only 44% from Inalum’s output.
The development of the SGAR facility is expected to reduce the country’s reliance on imported aluminum, strengthening Indonesia’s position as a key player in the global alumina and aluminum markets.
(Raidi/Agung)
