Indonesia's Ministry of Industry seeks HGBT inclusion for the aluminium sector to accelerate downstreaming

JAKARTA, November 2025 - The Ministry of Industry (Kemenperin) has formally proposed extending the Harga Gas Bumi Tertentu (HGBT) scheme priced at USD 6–7 per MMBTU to the aluminium industry. Currently, the subsidised rate is limited to seven sectors: fertiliser, petrochemical, oleochemical, steel, ceramic, glass, and rubber gloves.

Yosef Danianta Kurniawan, Head of the Non-Ferrous Metal Industry Working Team, stated at the Media Gathering Forwin 2025 on 14 November 2025 that natural gas serves a critical dual role in aluminium production: as an energy source and as feedstock for carbon anode manufacturing.

Strategic Alignment with Current Global and Domestic Dynamics

• China’s effective prohibition on overseas coal-fired power financing
  • Following the 2021 pledge which China will not finance any new coal-fired power plants abroad, severely restricting financing for captive coal plants in new industrial projects.
• Clear cost advantage of gas-fired generation in Indonesia
  • Combined-cycle gas turbine (PLTGU) plants generate electricity at a lower price versus coal-fired (PLTU) facilities, benefiting from higher efficiency.

Cost Impact of HGBT at USD 6–7 per MMBTU

Note: The following table only represents gas as an electricity feedstock.

Value-Chain Benefits

Primary aluminium Smelting

• Enhanced competitiveness against imported aluminium.
• Removes the final hurdle for Chinese investors restricted from financing overseas coal plants, enabling new gas-based smelters.

Alumina Refining

• Increased domestic demand for smelter-grade alumina as smelters become more profitable and expand capacity.
• Strengthens enforcement of the Domestic Market Obligation (DMO), reducing SGA exports while cutting alumina imports.

Bauxite Mining & Washing

• Reliable local offtake for washed bauxite ore (WBA) with predictable, growing volumes.
• Provides long-term supply security and bankability for upstream investments.

Implementation Considerations

• Inclusion of a new sector requires amendment of the relevant ministerial decree and inter-ministerial coordination.
• Fast-track captive PLTGU permitting in industrial parks is essential to unlock the full cost advantage of 100  per cent gas-supported designs.

Strategic Conclusion

• HGBT at USD 6–7 per MMBTU is one of the most effective de-risking and acceleration instruments for Indonesia’s bauxite-to-aluminium downstreaming program.
• Aligns perfectly with China’s overseas coal financing ban, PLTGU’s inherent cost advantage, and the existing USD 15–20 billion investment pipeline.
• Transforms a modest cost relief into a potential competitive advantage for fully gas-integrated facilities, positioning Indonesia as one of the world’s lowest-cost primary aluminium producers.

The Ministry of Industry (Kemenperin) and industry stakeholders seem to be cautiously optimistic that under-utilised quotas can be redirected to the aluminium sector. Further, HGBT eligibility at USD 6–7 per MMBTU, combined with expedited captive PLTGU permitting, would serve as the decisive catalyst to accelerate the next phase of multi-billion-dollar investments, which could firmly establish Indonesia as one of the world’s most cost-competitive integrated aluminium hubs outside the Middle East.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.