Indonesian miners delay plans of alumina refinery on legal uncertainty

The plans of building alumina refineries by bauxite producers in Indonesia are getting delayed due to legal uncertainty over export ban that was imposed nearly five months ago, said government & industry officials.

The Constitutional Court of Indonesia has to still decide on a legal challenge against the mineral export ban imposed by Indonesian government to force miners build refineries as well as processing plants. Before the export ban was imposed, Indonesian bauxite accounted for almost 12% of the global aluminium production with China taking huge shipments of the metal for processing into alumina, a stage in aluminium production.

About five alumina refinery projects are under construction in Indonesia according to industry officials, but due to legal uncertainty has forced the firms to slow down their construction plans for any upcoming refineries than can cost the companies around $1 billion each.

"They are worried if the court allows exports again, bauxite producers will be able to resume shipments of raw materials. Investors want the ban to remain," Dede Suhendra, Mineral Enterprise Director at the mining ministry, told reporters.

This case has been put aside by the Constitutional Court of the country as it wants to presently focus on election-based lawsuits. The presidential election is scheduled on July 9. The case, brought by Indonesia's Mineral Entrepreneurs Association, has been put aside by the country's Constitutional Court as it focuses its attention on election-based lawsuits. The presidential election is on July 9.

PT Bintan Alumina Indonesia is planning to start operations at their valumina refinery, with a total capacity of 2 mn tons a year, by early 2017, Santony, the company director said.

Suhendra said the Indonesian government was positive that the court will decide ultimately in its favour, permitting the refinery projects to start.

"If the court decides to not change the ban, then I think things will go smoothly next year," he said. "I don't think the Constitutional Court will cancel the ban."