Mempawah Smelter Accelerated: Danantara Targets Completion by 2028
07 Feb 2026, 02:40 AM
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The bauxite downstreaming initiative towards alumina and aluminum production in Mempawah, West Kalimantan, is entering a new chapter. The Investment Management Agency or BPI Danantara targets all energy infrastructure supporting this strategic project to be completed within the next two years. Electricity is considered the primary key to ensuring smelter operations proceed according to schedule.Danantara’s Chief Operating Officer, Dony Oskaria, emphasized that accelerating the construction of power infrastructure is an urgent priority. Without adequate energy supply, the series of processing plants from bauxite to aluminum will not be able to operate optimally.“We expect this to be completed within two years, so that by 2028, all energy infrastructure is ready to support operations,” Dony stated during the Groundbreaking of Six Phase I Downstreaming Projects at Wisma Danantara, Jakarta, Friday, February 6, 2026.This target is aligned with the major operational plans for downstreaming projects in the region. The new aluminum smelter is scheduled to begin operations in 2028, while the Smelter Grade Alumina Refinery (SGAR) Phase II is targeted to follow in 2029. Total investment for these two massive projects reaches IDR 104.55 trillion.To ensure the project runs efficiently, Danantara has decided on an energy supply scheme deemed most economical. The power supply for the project, which is being handled by PT Indonesia Asahan Aluminium (Inalum) and PT Aneka Tambang Tbk (Antam), will be supplied by PT Bukit Asam Tbk (PTBA).“The electricity needs for this project will eventually be built by PTBA. Since the energy source comes from coal, operational costs can be suppressed so that the resulting products remain competitive,” Dony explained.This decision was made with good reason. Previously, the issue of electricity availability was a serious topic of discussion during a Hearing with Commission VI of the House of Representatives (DPR RI) in September 2025. At that time, concerns were raised regarding whether the energy supply for a project of this scale could be fulfilled on time.Danantara ultimately chose an independent business area scheme (Wilayah Usaha or Wilus), placing the energy management for the smelter area outside the business territory of PT PLN Persero. This scheme is believed to provide greater flexibility in cost control and supply reliability.Dony emphasized that the price of electricity will largely determine the success of the aluminum smelter project. This industry is known to be highly energy-intensive, meaning even a small difference in tariffs can have a significant impact on production costs. “One of the key success factors in an aluminum smelter is the price of electricity. Therefore, we applied for our own Wilus so that energy costs could be more controlled,” he asserted.From a technical requirement standpoint, this project requires a massive amount of electricity. Inalum's Head of Business Development and Strategy Group, Al Jufri, mentioned that the energy demand for the new smelter is estimated to reach 1.2 Gigawatts. The targeted electricity price is also quite tight, ranging from USD 4 to USD 5 cents per kilowatt hour (approximately IDR 674 to IDR 842 per kWh)."The electricity supply must be available by the fourth quarter of 2028. Regarding the energy source, we are not too restrictive. The most important thing is the price. Whoever can provide the best price, that is who we will choose," said Al Jufri.Technical preparations on the ground have also begun to mature. Inalum has prepared approximately 100 hectares of land in the Kijing coastal area as the location for the power plant and supporting facilities. This site was selected based on logistics efficiency considerations, particularly for coal transportation.“We have mapped out an area near the Kijing port of about 100 hectares. Coal transport vessels can berth directly, and the transmission distance to the smelter is only about five kilometers,” Al Jufri continued.On the energy provider side, PT Bukit Asam Tbk confirmed its readiness to support this strategic project. PTBA President Director Arsal Ismail stated the company's commitment to being a vital part of the national downstreaming ecosystem through the provision of reliable and affordable electricity.“PTBA is committed to supporting strategic downstreaming programs through the provision of reliable, efficient, and competitive energy. Providing energy support for integrated alumina–aluminum processing in Mempawah is proof of our seriousness in strengthening the industrial supply chain and national energy security,” Arsal said.The downstreaming project in Mempawah is indeed a backbone of Indonesia's ambition to strengthen industries based on natural resources. By processing bauxite domestically into high-value aluminum, the government hopes that dependence on raw material exports will continue to decrease.However, the entire plan can only run smoothly if the main prerequisite is met: the availability of sufficient and cheap electricity. Therefore, accelerating the construction of energy infrastructure is the most critical task for Danantara and all related parties.If the 2028 target is achieved, Indonesia will enter a new era for the national aluminum industry with a much larger production capacity and a more integrated supply chain. For the government, the success of this project is not merely a business matter, but a strategic step toward strengthening industrial sovereignty and national economic competitiveness.
