Jakarta, Indonesia Sentinel — State-owned mining holding MIND ID has revealed the significant value added through Indonesia’s government-driven downstreaming efforts, particularly in the bauxite sector.
Dilo Seno Widagdo, Director of Portfolio and Business Development at MIND ID, explained that processing bauxite into alumina and ultimately aluminum creates an exponential increase in value.
According to company estimates, the current price for one ton of bauxite is around $40. However, when processed into alumina, its value jumps by 15 times to $575 per ton.
“For example, selling raw bauxite only gets you around US$40, but when turned into alumina, the price skyrockets to $575, almost 15 times the original value,” Dilo said during a mining industry forum in Jakarta as reported by CNBC Indonesia on Tuesday, October 15, 2024.
The value increases even more dramatically when alumina is processed into aluminum. The price can soar to as high as $2,700 per ton, about five times the value of alumina and nearly 60 times the price of raw bauxite.
“If converted into aluminum, today’s price is between $2,600 and $2,700. That’s a fivefold increase from alumina, and almost 60 times more than the price of bauxite ore alone,” he noted.
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Beyond the economic benefits, the downstreaming program has also had a substantial impact on job creation. The processing industry ranks third in terms of workforce absorption in Indonesia, trailing only the agriculture and trade sectors.
“Aside from the industrial side, the processing sector is a significant job creator. Agriculture is likely the largest sector for employment in Indonesia, followed by trade and services. But processing industries come in third. MIND ID recognizes the large employment opportunities generated by investments in downstreaming projects,” Dilo added.
Indonesia’s downstreaming initiatives such as bauxite sector is aim to increase the country’s control over its vast natural resources, creating more value domestically by processing raw materials before export. This approach is expected to reduce Indonesia’s reliance on raw commodity exports and enhance its role in global value chains.
(Raidi/Agung)
