ABI warns of bauxite supply risks to smelters amid RKAB delays

By Cepi Setiadi

Indonesia’s bauxite industry is facing mounting upstream challenges due to limited issuance of mining work plan approvals (RKAB), a situation that has begun disrupting raw material flows to domestic alumina refineries amid the government’s downstream mineral processing push.

Chairman of the Indonesia Bauxite Association (ABI) Ronald Sulistyanto said several domestic alumina refineries are currently unable to operate at full capacity because of insufficient bauxite availability.

 “Refinery utilization is currently only around 60% due to limited bauxite supply, as many RKAB approvals have yet to be issued,” Ronald told Petromindo.com in a recent interview.

According to Ronald, Indonesia fundamentally does not face a shortage of bauxite resources. Potential output from miners is estimated to be significantly higher than current refinery demand.

However, delays in RKAB approvals by the Ministry of Energy and Mineral Resources for a number of mining permit holders have constrained deliveries to refineries.

Ronald said Indonesia currently has four major alumina refinery projects operating or under development: PT Well Harvest Winning Alumina Refinery (WHW), PT Bintan Alumina Indonesia (BAI), PT Borneo Alumina Indonesia, a subsidiary of PT Aneka Tambang Tbk (Antam), and PT Borneo Alumindo Prima (BAP).

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He estimated that existing refinery capacity would require around 20 million tons of bauxite annually, based on a conversion ratio of roughly three tons of bauxite to produce one ton of alumina.

 “If BAI in Bintan has a capacity of 4 million tons, WHW 2 million tons, BAP 1 million tons, plus Antam’s Borneo Alumina Indonesia at around 1 million tons, then total bauxite demand would reach around 20 million tons per year,” he said.

At the same time, around 40 bauxite mining companies have reportedly applied for RKAB approvals, with combined proposed production volumes estimated at between 30 million and 40 million tons annually.

Assuming each company receives an average quota of 1 million tons, the market could theoretically face an oversupply situation.

 “In principle, supply is actually larger than demand. But the problem now is that only around 25% of the proposed RKAB volumes have been approved,” Ronald said.

He noted that the situation has created shortages for refineries despite the country’s ample reserves and production potential.

 “If only around 10 million tons have been approved while refinery demand is already around 20 million tons, then naturally there will be a supply imbalance,” he said.

Ronald urged the government to accelerate the RKAB approval process to ensure stable raw material availability for refineries. However, he acknowledged that authorities face a dilemma because approving all RKAB applications at once could potentially create market oversupply.

 “It’s a double-edged sword. If all RKABs are approved simultaneously, there could be oversupply,” he said.

Editing by Reiner Simanjuntak