(Bloomberg) — PT Indonesia Asahan Aluminium has set a long-term goal of tripling its production capacity by expanding operations to the island of Borneo as it seeks to utilize the region’s abundant bauxite reserves.
The state-owned company known as Inalum plans to boost capacity to 750,000 tons by building a 500,000-ton smelter in North Kalimantan, on the Indonesian side of Borneo, as power supply constraints limit the expansion of its sole facility in Kuala Tanjung, North Sumatra, according to Managing Director Oggy Achmad Kosasih. He didn’t give a timeline.
The existing smelter relies on electricity from a hydro plant that can only provide enough power for 250,000 tons of aluminum a year, Kosasih said in an interview on Monday in Kuala Tanjung. The company is trying to increase output to 300,000 tons by upgrading its furnace, he said.
The expansion by Inalum, which has various holdings in the country’s top miners including a 51% stake in PT Freeport Indonesia — the company that runs the giant Grasberg copper and gold mine — is in keeping with President Joko Widodo’s goal of shifting the country from an exporter of minerals into a major producer of processed metals.
The move will also help cut raw material costs as Kalimantan is Indonesia’s top bauxite producing region.
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