When the National Aluminium Industry Chain Begins to Interconnect
JAKARTA. The downstreaming of the bauxite industry is one of the government’s strategic agendas to optimise the added value of mineral resources while strengthening national economic growth. Indonesia itself is one of the countries with the largest bauxite reserves in the world.
According to the Ministry of Investment/Investment Coordinating Board (BKPM) document on the Roadmap for Strategic Investment Downstreaming of the Bauxite Commodity 2023–2040, Indonesia holds bauxite reserves of around 1.2 billion tonnes as of 2022, the sixth largest in the world.
The industry’s prospects are also underpinned by rising global aluminium demand. The roadmap projects that world aluminium demand could reach 243.98 million tonnes per year by 2050, driven chiefly by the transport and construction sectors.
In line with the development of the electric vehicle and new renewable energy (EBT) industries in Indonesia, the government has prioritised bauxite downstreaming to support the solar panel and electric vehicle component industries.
In addition, development opportunities are also open for the food packaging, electronics components and building materials industries, which have prospects in both domestic and global markets.
The government is targeting cumulative bauxite downstreaming investment of US$ 48.89 billion between 2023 and 2040.
Over the same period, the programme is projected to contribute US$ 36.99 billion to gross domestic product (GDP) and absorb around 766,807 workers.
At present, the focus of bauxite downstreaming in Indonesia remains directed at processing into alumina, whether chemical grade alumina (CGA) or smelter grade alumina (SGA). Investment in this sector continues to show growth.
Based on Ministry of Investment/BKPM data, realised bauxite downstreaming investment reached Rp 53.1 trillion in 2025, surging 143.58% year on year compared with Rp 21.8 trillion in 2024.
The positive trend continued into the first quarter of 2026 with realised investment of Rp 13.7 trillion, up 6.7% year on year from Rp 12.84 trillion in the same period a year earlier.
Referring to Ministry of Investment/BKPM data combined with Kontan research, there are currently more than a dozen companies that have built or are building bauxite downstreaming facilities. The products produced are diverse, ranging from CGA, SGA, aluminium ingot and aluminium alloy to anode carbon.
Inalum currently operates an aluminium smelter in Kuala Tanjung, North Sumatra, with a production capacity of 275,000 tonnes of aluminium per year.
Meanwhile, Indonesia Chemical Alumina (ICA) is a CGA producer in Indonesia with a capacity of 300,000 tonnes per year. The plant, located in Tayan, West Kalimantan, is 99.9989% owned by PT Aneka Tambang Tbk (ANTM).
The CGA from this facility is used as raw material for manufacturing industries, such as the chemical industry, fire-resistant bricks, ceramics and various other applications.
Borneo Alumina Indonesia (BAI), meanwhile, is a joint venture between ANTM and Inalum with shareholdings of 40% and 60% respectively.
The company completed construction of the Phase I smelter grade alumina refinery (SGAR) in Mempawah, West Kalimantan, with a capacity of 1 million tonnes of SGA per year in 2025, and entered full operation in 2026.
Borneo Alumina Indonesia President Director Darwin Saleh Siregar said the presence of the SGAR represents a link that has long been missing in the national aluminium industry.
The facility connects bauxite supply from ANTM with Inalum’s aluminium smelter, so that domestic alumina needs are no longer entirely dependent on imports.
To build SGAR Phase I, Borneo Alumina Indonesia poured in investment of around US$ 831.5 million. Around 30% of the funding came from shareholders’ equity, while the remaining 70% came from a shareholder loan scheme.
Around 60% of the SGA production from the facility is allocated as raw material for Inalum’s smelter in Kuala Tanjung, while the remaining 40% is marketed to other customers, including in China and India.
“Almost 95% of our product is used by the aluminium industry because our product is Smelter Grade Alumina (SGA). So the majority is used for aluminium smelters,” Darwin told Kontan on Tuesday (14 July).
He added that around 5% of SGA production is used for the water purification and chemical industries. In terms of supply, the SGAR plant requires around 3 million–3.2 million tonnes of washed bauxite to produce 1 million tonnes of SGA.
At present, raw material is supplied from ANTM’s mining business licence (IUP) area in Tayan, West Kalimantan. Going forward, supply is also planned to come from ANTM’s IUPs in Toho and Landak.
According to Darwin, the operation of the SGAR has significantly increased the added value of the bauxite commodity. Alumina prices now stand at between US$ 340 and US$ 400 per tonne, roughly 10–11 times higher than bauxite ore prices.
SGAR Phase II is targeted to begin commercial operation in late 2028 or early 2029.
At the same time, Inalum plans to build a second aluminium smelter in Mempawah with a capacity of 600,000 tonnes per year. With this additional facility, Inalum’s aluminium production capacity will rise to around 900,000 tonnes per year.
“If both Inalum smelters are operating, domestic alumina demand is estimated to reach around 1.8 million tonnes. This means almost all of BAI’s production from SGAR Phase I and II will be absorbed domestically,” Darwin said.
Aneka Tambang Corporate Secretary Wisnu Danandi Haryanto said downstreaming has driven ANTM to optimise its bauxite business portfolio.
In 2025, the company’s bauxite production rose 112% year on year to 2.83 million wet metric tonnes (wmt), while sales jumped 157% to 1.89 million wmt. With this achievement, ANTM’s contribution to national bauxite production is estimated at 8%–9%.
Of that total production, around 2 million wmt is absorbed by BAI as raw material for the SGAR, while around 600,000 wmt is used to supply the needs of ICA’s CGA plant.
Wisnu believes that processing bauxite into alumina, whether CGA or SGA, delivers higher economic value than selling ore.
Nevertheless, the scale of added value is determined not only by the price difference between bauxite and alumina, but also by recovery rates, energy costs, chemicals, logistics, production capacity and prevailing market prices.
“Downstreaming also broadens the product portfolio, increases domestic mineral absorption, strengthens market certainty for mining production, and supports the formation of a national alumina and aluminium industry chain,” Wisnu told Kontan on Thursday (16 July).
Going forward, ANTM will continue to synergise with MIND ID, Inalum, the government and strategic partners in developing SGAR Phase II and subsequent aluminium projects.
ANTM is also continuing exploration activities to improve the quality of bauxite resource and reserve data in order to safeguard long-term supply sustainability.
“These activities are being carried out in stages across IUP areas owned by Antam and its subsidiaries, always in accordance with the company’s work plans, licensing provisions and the application of good mining practices,” he said.