Indonesia's Antam signs MoU with Chinalco for Mempawah alumina refinery

Indonesian minerals miner Aneka Tambang has signed a memorandum of understanding with Aluminum Corporation of China to develop a smelter-grade alumina refinery in Mempawah, West Kalimantan, the company said in a statement late on Wednesday.

The move is aimed at integrating the production process. Currently, Indonesia exports an abundance of bauxite and imports it back after being refined into alumina, which is then smelted by Inalum to make aluminum. The Antam-Inalum alliance will simplify the process and cut costs. It will allow Antam to sell aluminum at home and abroad at lower prices, and will secure Inalum stable orders from the increasing number of automakers and parts makers in Indonesia.

Months before the memorandum, Antam and Inalum agreed to set up a joint venture to build a plant for smelter grade alumina in Mempawah, West Kalimantan, inviting big names from overseas such as China, Russia and the United Arab Emirates to join them. Chinalco has finally joined the project, which is expected to cost $1.8 billion.

The smelter would have a capability to churn out two million tons of alumina a year and would supply the raw material to Indonesia Asahan Aluminum (Inalum) in North Sumatra, said Tedy Badrujaman, the president director of Antam. The smelter would consume six million wet metric tons of bauxite ore annually.

Antam's total bauxite ore reserve stood at 111.5 million metric tons at the end of 2014, while the mineral resources - which are still unprofitable to mine under current economic and technological conditions - stood at 589 million wet metric tons.

The State-owned company's Mempawah mine contains about 120 million WMT measured and inferred resources, according to its 2014 annual report.