Inalum Highlights Economic Benefits of Bauxite Downstreaming

Significant Value Addition in Aluminium Production

PT Indonesia Asahan Aluminium (Inalum), a member of the state-owned mining holding company MIND ID, has revealed the substantial economic benefits of processing bauxite into aluminium. According to Al Jufri, Head of Business Development and Strategy at Inalum, the value added from this downstream processing is considerable. The raw material, bauxite, is typically priced around US$40 per ton. Once processed into alumina (an intermediate product), the price increases dramatically to approximately US$400 per ton, representing a tenfold increase. The value addition becomes even more significant when alumina is further processed into aluminium, with global prices ranging between US$2,900 and US$3,000 per ton.

Strategic Expansion and Economic Impact

Inalum is currently undergoing expansion to promote downstream processing within Indonesia. This strategic move aligns with the country's efforts to enhance its industrial base and create higher-value economic activities. The substantial increase in value from raw bauxite to refined aluminium underscores the potential economic benefits of Indonesia's downstreaming strategy in the mining sector.

Market and Economic Implications

The significant price differential between raw bauxite and processed aluminium highlights the financial advantages of developing a robust domestic aluminium industry. By processing raw materials into higher-value products, Indonesia can potentially increase its export revenues and create more skilled employment opportunities. This approach is consistent with broader government initiatives aimed at transforming the economy through industrialization and value-added manufacturing.