Russian firm to build $2 billion aluminum plant

Russia-based United Company RUSAL, the world?s biggest aluminum producer, plans to build a smelting plant in Indonesian to process bauxite ores into alumina to take the advantage from the government?s ban on the export of unprocessed ores beginning 2014, The Jakarta Post reported on Wednesday.

Top executives from the company expressed their interest during a meeting with Deputy Industry Minister Alex Retraubun and industry officials on Tuesday in Jakarta. They discussed, among other things, possible tax incentives offered by the government for the proposed investment.

As an initial step, RUSAL would carry out a feasibility study on the alumina manufacturing facility in September, Retraubun said after the meeting.

The investment plan is a response to stipulations in the 2009 Mining Law which ban the export of unprocessed mineral products starting from 2014. Mining companies are required to build their own smelters or cooperate with other companies to process their ore production.

RUSAL could spend US$2 billion in the upcoming years to materialize its business plan, the Industry Ministry?s director general for manufacturing-based industry Panggah Susanto said.

The refinery would likely be located in West Kalimantan, where bauxite, the major raw material in the production of alumina, was abundant, he added.

The facility might produce up to 1.8 million tons of alumina per year with the output slated to be prioritized for sales to the domestic market to help the local industry reduce imports.

Alumina is the material used to make aluminum, a light-weight and flexible metal that can be used in a wide range? of industrial and consumer goods, including packaging, aircraft, household appliances and electrical components.

At present, Indonesia still cannot produce alumina on its own despite abundant bauxite resources. Inalum, the firm that operates the nation?s only aluminum smelter, still relies heavily on imports.

Late last year the Russian Ambassador to Indonesia Alexander A. Ivanov said that RUSAL was mulling setting up a refinery for bauxite or other non-ferrous metals as well as supporting infrastructure such as power plants with a local partner.

Several years ago, RUSAL teamed up with state-owned mining firm PT Aneka Tambang (Antam) to establish a $1 billion bauxite refinery in Tayan, West Kalimantan.

However, the plan was canceled for a variety of reasons, including the worldwide economic crisis. (*)