The Ministry of Energy and Mineral Resources proposes that seven bauxite companies with stalled refinery projects may form a consortium to build a joint refining facility.

The Special Staff of the Minister of Energy and Mineral Resources for the Acceleration of Mineral and Coal Governance, Irwandy Arif, explained that many companies have begun to develop bauxite refining facilities.

Out of 12 refineries built, four refineries are already operating, and one refinery owned by PT Borneo Alumina Indonesia will be completed. Therefore, seven residential facilities have not yet made any progress.

"Seeing this condition, the idea emerged that the seven companies join together to make one refinery. However, in my opinion, the coordination between companies in Indonesia is quite difficult," he explained at the Mining for Journalist 2024 event in Jakarta on Thursday (29/2/2024).

He admitted that until now, he has not received any feedback from the industry regarding the idea offered.

As another option, Irwandy also proposed that State-Owned Enterprises (BUMN) create a new refinery. If there are no objections, the solution is expected to make bauxite mining work again.

Previously, the government took firm action against the slow pace of refinery development with a ban on bauxite ore exports in June 2023.

Yet, the policy is even more burdensome for mining businesses. They struggle to obtain funds to cover refining facility projects. Hence, bauxite refinery development has not made any significant progress.

Director of Mineral and Coal Downstreaming at the Ministry of Investment/BKPM, Hasyim Daeng Barang, explained that the implementation of bauxite downstreaming had a few obstacles in several companies. The construction process was halted due to the COVID-19 pandemic, resulting in several investors withdrawing from the project.

"We try to facilitate the companies that have started their constructions to get (new) investors so that the factories can be built immediately. Apart from that, we also identify any obstacles the companies face," he said on the sidelines of the IMEC 2023 event in Jakarta on Tuesday (19/12/2023).

Hasyim said, without elaborating, that there have been several bauxite smelters whose construction has reached 30% to 40% based on BKPM data. Hasyim said he has seen several interests from foreign investors to enter the bauxite smelter project.

"We try to help facilitate, and there are several interested investors. Although we can't enter the business-to-business process because it's a company issue, we are trying to do it. One thing for sure is that there are Chinese investors interested," he explained.

However, the ongoing process is merely an assessment with the company that owns the project and concession. Later on, the agreement and business process will proceed in B2B.

BKPM hopes that this process can run quickly because, by 2024, there will be a new bauxite smelter in operation. The reason is that many bauxite ores are currently lying idle and cannot be utilized.

"There are a few that may be able to operate in mid-2024 since the progress is already 50%. That's what we're after," he added.

Image source: ANTARA FOTO / Panji
Source: https://industri.kontan.co.id/news/7-perusahaan-bauskit-diusulkan-bentuk-konsorsium-untuk-bangun-refinery