PT Adaro Minerals Indonesia Tbk (ADMR), a subsidiary of PT Adaro Energy Tbk (ADRO) continues to drive downstream minerals through an aluminum smelter construction project in North Kalimantan (Kaltara). The smelter is targeted to be completed in the second quarter of 2025. For information, ADMR is developing an aluminum smelter through PT Adaro Indo Aluminum (AIA). AIA then established PT Kalimantan Aluminum Industry (KAI) in 2022 with a 65% stake to run an aluminum smelter project in Kaltara. Apart from AIA, KAI shares are also held by PT Cita Mineral Investindo Tbk (CITA) as much as 12.5% and Aumay Mining Pte. Ltd as much as 22.5%.
Director of Adaro Minerals Indonesia Wito Krisnahadi said that the construction of the ADMR aluminum smelter in North Kalimantan is still ongoing. This project has an investment requirement of up to US$ 2 billion, which is separate from ADMR's regular capital expenditure (capex). ADMR has also finalized the smelter financing with several banks. However, this issuer is reluctant to reveal the names of the banks in question. "We should have signed or finalized it before the second quarter ended," said Wito in a press conference, Wednesday (10/5). In the early stages, the smelter is expected to produce around 500,000 tons of aluminum ingots per year which can then be increased to 1.5 million tons per year. To produce aluminum, ADMR requires an alumina supply of 1 million tonnes per year.
Wito said ADMR had signed a Memorandum of Understanding (MoU) with a number of local alumina producers and traders to supply alumina to the smelter. The finalization or certainty of alumina supply for ADMR will be known about one year or six months before the Commercial Operation Date (COD) of the smelter in Kaltara. "About 50% of the supply comes from local, the rest from traders. But this is just an MoU because our COD smelter is still two years away," explained Wito. On the same occasion, President Director of Adaro Minerals Indonesia Christian Ariano Rachmat added, so far Indonesia has had a high dependency on aluminum imports. Within a year, Indonesia's aluminum imports could reach 1 million tonnes.
"If the price of aluminum is US$ 2,500 per ton, Indonesia can spend US$ 2.5 billion a year to import this product," he said. Such conditions cannot continue to occur because it will erode the national foreign exchange. Therefore, if the first phase of the ADMR smelter construction is completed, it is hoped that aluminum imports will be cut by half from the initial amount.
