Local aluminium productions failed to meet demands

JAKARTA. Aluminium demands are expected to rise every year. However, the domestic aluminium production failed to meet the demands, as most of the local aluminum demands still depended on the imports.

This year, the domestic aluminium demands are estimated to reach 850,000. However, the local aluminium producer PT Indonesia Asahan Aluminium Limited (Inalum) is only able to supply 250,000 ton.

Director General of Metal, Machinery Transport, and Electronics at the Ministry of Industry I Gusti Putu Suryawirawan explained that the lack of domestic production occurs for two reasons. First, the value of the investment to build an aluminium smelter is fairly expensive.

Second, the aluminium smelter requires large energy supplies. In order to access cheap electricity, some investors had privately set up the power plants, said Putu, Sunday (13/11).

Due to the jumbo investment value, investors are rarely attracted to invest in aluminium industry. Even so, Putu said, now there are number of investors, who are interested in building an aluminium smelter in the country.

In order to attract the investors, the government provides tax holiday and tax allowance. Putu said that some investors have invested in bauxite, while others are ready to build aluminium smelter, like PT Well Harvest Winning (WHW) in Ketapang, West Kalimantan.

To date, PT Inalum is the sole domestic producer of aluminium. Although Inalum is the state owned enterprise, the company still has limitation in increasing its production capacity, on the grounds that it requires huge amount of investment and energy supplies. Even so, Winardi Sunoto, President Director of PT Inalum, stated that the company has drawn up a plan to increase the production in a gradual manner.

The plan for increasing the productions was designed based on the increase in aluminium demands, which grew by 4%-5% annually. The Inalum’s blue print mentions that the company will increase its production to 325,000 ton in 2020.

Subsequently, the production will be increased to 500,000 ton in 2021, following the operation of its new factory in Kuala Tanjung. However, the additional production will remain insignificant to meet the domestic aluminium demands. Winardi said, the productions will not be able to meet the demands, which grow faster, even though Inalum will have increased the production capacity.

Inalum sets to increase the production target to 1 million ton by 2025. Chairman of Indonesia Aluminium Association Abu Bakar said that government may provide incentives to attract investors to invest and build aluminium smelter in Indonesia. To date, the demands are high, but the imports are also high, Abu Bakar told KONTAN, Sunday (13/11). (Translator: Muhammad Farid)