INALUM expands capacity to double production

Indonesia Asahan Aluminum (INALUM) has allocated up to US$2.5 billion to finance a number of projects in order to help achieve a target of producing 500,000 tons of aluminum by 2020. Among the projects are a new 200,000 ton capacity aluminum smelter and a steam-fueled power plant (PLTU) as well as the expansion of Inalum’s designated port at Kuala Tanjung in North Sumatra.

Inalum president director Winardi Sunoto said that in order to accomplish the production target, Inalum would need a minimum of 1 million tons of raw aluminum material to process. Currently, the state-owned aluminum maker's top production capacity is at 250,000 tons.

“With our expansions and our projects, we expect to be able to double our production by 2020,” Winardi said on Thursday.

Regarding the projects, Winardi added that the power plant would break ground in 2016 and would take two to three years to build, while the new smelter would be built later. According to Winardi, Inalum is aiming to produce 255,000 tons by the end of 2015, with a monthly production rate of 21,000 tons this year.

However, Winardi said his company would likely miss its target to achieve $104 million in net income amid a slump in commodity prices by 30 percent this year.

Meanwhile, Inalum signed a memorandum of understanding with state-owned diversified miner PT Aneka Tambang (Antam) to jointly operate a smelter grade alumina refinery (SGAR) in West Kalimantan. The memorandum solidified the formation of a joint venture between the two companies, which will manage the construction of the bauxite processing refinery.

Antam’s bauxite reserves processed at the new refinery will also enable Inalum to break free from depending on raw aluminum imports. However, the joint venture will not be included in Inalum’s five-year plan due to the project not being a wholly Inalum venture.