Indonesia Boosts Aluminium Downstreaming Amid Surging Demand

Strategic Move to Meet Future Needs

Indonesia is taking significant steps to accelerate aluminium downstreaming as the country faces a projected 600% increase in national aluminium demand over the next three decades ¹

. This surge is primarily driven by the rapidly growing electric vehicle (EV) sector and the expansion of renewable energy infrastructure, both of which heavily rely on aluminium. Indonesia Asahan Aluminium (Inalum), the state-owned entity responsible for aluminium production, is at the forefront of this initiative.

Government Support for Industry Development

To further support the aluminium industry, the Ministry of Industry is considering extending the subsidized gas supply scheme (HGBT) currently available to seven industries - including fertilizer, petrochemicals, and steel - to aluminium producers ²

. This move aims to reduce production costs and enhance the competitiveness of domestic aluminium manufacturers in the global market. Yosef Danianta Kurniawan from the Ministry of Industry emphasized that gas supply is crucial for aluminium production, serving both as an energy source and raw material.

Key Drivers of Aluminium Demand

The increasing demand for aluminium is largely attributed to its critical role in emerging technologies. Electric vehicle batteries require significant aluminium content, with a single battery pack using around 18% aluminium. Moreover, solar power plant construction demands approximately 21 tons of aluminium per megawatt of capacity. Arif Haendra, Inalum's Business Development Director, highlighted that Indonesia is at a crucial juncture to develop a comprehensive aluminium industry ecosystem, from upstream to downstream operations.

Current Challenges and Future Prospects

Despite the promising outlook, Indonesia currently relies heavily on aluminium imports, with 54% of national consumption being imported between 2018 and 2024, while Inalum's contribution stood at only 46%. This dependency underscores the urgency of accelerating downstream development to achieve self-sufficiency and capitalize on the growing global demand. The government's initiatives, coupled with Inalum's strategic plans, are expected to strengthen Indonesia's position in the global aluminium market.