Indonesian Miners Delay Alumina Refinery Plans on Legal Uncertainty

Indonesian Miners Delay Alumina Refinery Plans on Legal Uncertainty

By Wilda Asmarini & Yayat Supriatna on 01:59 pm Jun 19, 2014

Jakarta. Bauxite producers are delaying plans to build alumina refineries in Indonesia due to legal uncertainty over a mineral ore export ban imposed five months ago, government and industry officials said.

Indonesia’s Constitutional Court has yet to decide on a legal challenge against a Jan. 12 export ban on bauxite, nickel and other mineral ores imposed by the government to force miners to build refineries and processing plants.

Before the ban, Indonesian bauxite exports accounted for about 12 percent of global aluminum production, with China taking the bulk of shipments for processing into alumina, an intermediate stage in the production of aluminium.

As many as five alumina refinery projects are underway in Indonesia, industry officials said, but the legal uncertainty means firms have slowed their construction plans for the refineries, which can cost as much as $1 billion each.

“They are worried if the court allows exports again, bauxite producers will be able to resume shipments of raw materials. Investors want the ban to remain,” Dede Suhendra, Mineral Enterprise Director at the mining ministry, told reporters.

The case, brought by Indonesia’s Mineral Entrepreneurs Association, has been put aside by the country’s Constitutional Court as it focuses its attention on election-based lawsuits. The presidential election is on July 9.

Indonesia has only one chemical grade alumina refinery, opened in April by state-owned Aneka Tambang (Antam).

Well Harvest Winning Alumina, a joint venture between Indonesian conglomerate Harita Group and China’s Hongqiao Group, was initially expected to begin operations at its refinery in West Kalimantan in mid-2015.

The start-date has now been pushed back to early 2016 at the earliest, said Erry Sofyan, director of Harita Prima Abadi Mineral, a unit of the Harita Group.

Sofyan added that he hoped the government would allow companies building refineries to export some bauxite to enable them to obtain the necessary funds for their projects.

Bintan Alumina Indonesia is hoping to start operations at its alumina refinery, with a capacity of 2 million tonnes a year, by early 2017, said company director Santony.

Suhendra said the government was optimistic that the court will ultimately decide in its favour, allowing refinery projects to resume.

“If the court decides to not change the ban, then I think things will go smoothly next year,” he said. “I don’t think the Constitutional Court will cancel the ban.”



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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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