Optimizing National Bauxite Downstream, Creating Added Value of Up to US$3.8 trillion

JAKARTA – Indonesia’s steps to increase the added value of its natural mineral resources, bauxite, to alumina and aluminum are now entering a new, more progressive phase through the expansion of domestic alumina smelters.

One of the projects being intensified by the government is an integrated bauxite mining and processing facility located in Mempawah, West Kalimantan. This project is managed by PT Borneo Alumina Indonesia (BAI), which is an initiative of MIND ID Group Members, namely PT Aneka Tambang Tbk and PT Indonesia Asahan Aluminum.

The presence of this refining facility is an important milestone in the transformation of the structure of the national mining industry, from being dominated by exports of raw materials to a value-added industry to support economic growth of 8%.

Meanwhile, Indonesia is recorded as having total bauxite resources of around 7.78 billion tons. If all reserves are sold in the form of raw materials with an assumed price of US$40 per metric ton, the potential economic value is only around US$311.2 billion or the equivalent of IDR 5,238 trillion assuming a JISDOR exchange rate of IDR 16,834 per US dollar.

The economic value of Indonesia’s natural mineral resources soars when bauxite is further processed. If processed further through a refining process, 3 tons of bauxite will produce 1 TON of alumina.

So, from the same reserves, the potential for alumina production is estimated at 2.59 billion tons. Assuming a price of US$400 per metric ton, the economic value increases by around US$1,037 billion or equivalent to IDR 17,435 trillion.

At the aluminum production stage, at least 2 tons of alumina are needed to produce aluminum. Thus, the estimated production is around 1.29 billion tons of aluminum and the price is US$3,000 per metric ton, and the total economic value that can be created reaches around US$3,885 billion or the equivalent of IDR 65,145 trillion.

This comparison shows the large potential for value creation resulting from bauxite downstreaming, while also emphasizing the importance of strengthening alumina refining capacity as the foundation of the national aluminum industry.

Executive Director of Indonesia Mining and Energy Watch (ISEW), Ferdy Hasiman, assessed that the bauxite downstream steps initiated by MIND ID through this project show a transformation from extractive mining patterns to an integrated industrial ecosystem.

“In 2025, MIND ID has shown very significant progressive steps. They are starting to abandon the old pattern of extractive mining and appear as the front guard in reducing the balance of payments deficit through the downstreaming of various mineral commodities,” said Ferdy in his statement.

The International Aluminum Institute study states that alumina refining capacity is the main indicator of the competitiveness of a country’s aluminum industry.

With the operation of integrated bauxite-aluminum downstreaming in Mempawah, Indonesia now occupies a strategic position to supply global aluminum needs, especially for the manufacturing, transportation and renewable energy industries.

Energy economics observer from Gadjah Mada University, Fahmi Radhi, also stated that the success of downstreaming in Mempawah is a clear example of how the bauxite ore export ban policy can be optimized to build sustainable industrial sovereignty.

On the economic side, the SGAR project creates a multiplier impact in West Kalimantan through employment and infrastructure development.

Overall, strengthening bauxite downstreaming through SGAR is a long-term government instrument to secure strategic industrial raw materials while strengthening Indonesia’s bargaining position in the world mineral market.

This Press Release was also published on VRITIMES