Aluminium Ore Producers of Indonesia Delay Refinery Projects on Legal Uncertainty

JAKARTA (Scrap Monster): Bauxite (Aluminium Ore) Producers are putting delay on the plans to construct alumina refineries in Indonesia because of the legal uncertainty in the ore export ban imposed in January.

The Constitutional Court of Indonesia has yet to take decide over the legal challenge against the export ban on nickel, bauxite and other mineral ore, which was imposed by the government to force the miners to build their own refineries and processing smelters. Indonesian bauxite exports accounts for about 12 percent of global aluminium production, before the ban. China consumed the major shipments of ore for aluminium production.

Industrial officials said that about five alumina refinery projects were in progress in Indonesia, however, the legal uncertainties meant about the slowed construction plan for the refineries which could cost up to $1 billion each. Dede Suhendra, Mineral Enterprise Director at the mining ministry said that they were anxious if the court allows exports again, the bauxite producers could be able to do shipments of raw materials again. But, the investors wished to retain the ban.

As the court is now focusing on the presidential election of July 9, they had put aside the case brought up by Indonesia’s Mineral Entrepreneurs Association. The nation has only one chemical grade alumina refinery, commissioned in April by Indonesia’s Aneka Tambang. A joint venture by Indonesia’s conglomerate Harita Group and Hongqiao Group of China, Well Harvest Winning Alumina was initially set to begin its refinery operations in West Kalimantan in 2015 mid. And now the start date had been shifted to early 2016, said director of Harita Prima Abadi Mineral, Erry Sofyan.

Bintan Alumina of Indonesia is expected to start the refinery operations in 2017, which has a capacity of 2 million tonnes per year, said Santony, company director. Suhendra added that the government was hopeful that the constitutional court would take a favorable decision, allowing the refinery projects to restart.