Adaro Minerals Accelerates Aluminium Smelter Project, Targeting Initial Operations by Late 2025

Jakarta, Indonesia – September 22, 2025 – PT Adaro Minerals Indonesia Tbk (IDX: ADMR), a subsidiary of leading Indonesian energy conglomerate PT Adaro Energy Indonesia Tbk (IDX: ADRO), is accelerating the development of its strategic aluminium smelter project. The ambitious goal is to commence initial phase operations by late 2025, marking a significant step in its business diversification efforts and the advancement of Indonesia's downstream aluminium industry.

The aluminium smelter project, being executed through its subsidiary PT Kalimantan Aluminium Industry (KAI), is located within the Kalimantan Industrial Park Indonesia (KIPI) in Bulungan, North Kalimantan. This initiative is part of a broader strategy to leverage the region's abundant resources and strategic geographical position to become a leading hub for green aluminium production.

Project Details and Implementation Roadmap

Adaro Minerals' aluminium smelter is designed with a total installed capacity of up to 500,000 tonnes of aluminium ingots per year. According to current plans, initial production is expected to reach approximately 250,000 tonnes by Q3 2025, with the aim of achieving full capacity by early 2026. This timeline underscores Adaro's strong commitment to bringing the project into commercial operation swiftly and efficiently.

The total investment for this project, including the smelter and associated infrastructure, is estimated at around US$2 billion. The specific capital expenditure for the smelter alone is approximately US$1.1 billion. This substantial investment reflects the scale and strategic importance of the project for Adaro Minerals and the Indonesian economy.

Strategic Vision: Green Aluminium and Renewable Energy

One of the most critical aspects of the project is Adaro Minerals' commitment to "green aluminium" production. While the initial phase of the smelter will be powered by a captive coal-fired power plant (1,100 MW) to meet high electricity demand, Adaro has outlined a clear roadmap for transitioning to renewable energy sources.

The long-term plan involves integrating the smelter with the Mentarang Hydropower Project, which includes five dams on the Kayan River with a total capacity of 1.3 GW. This hydropower project is expected to come online by late 2029 and will supply clean energy for the third phase of the aluminium smelter. This transition is a key factor for Adaro Minerals to realize its goal of producing low-carbon aluminium, meeting increasingly stringent environmental standards in the global market.

However, the use of coal-fired power in the initial phase has drawn criticism from environmental groups, who raise concerns about carbon emissions and accuse Adaro of "greenwashing" by promoting the project as "green" while still relying on coal. This presents a challenge in terms of public relations and environmental risk management for the company.

Impact on Indonesia's Downstream Aluminium Industry

Adaro Minerals' aluminium smelter project is not merely an investment in basic metal production but also a crucial component of the Indonesian government's strategy to develop the downstream aluminium industry. Instead of exporting raw bauxite or alumina, Indonesia is encouraging deeper processing to create higher value-added products such as billets, rods, and components for the automotive and packaging industries.

Domestic aluminium production will reduce reliance on imports, enhance supply chain security, and create thousands of new jobs. Furthermore, as one of the largest aluminium producers in the region, Indonesia can strengthen its position in the global market, especially given the surging demand for aluminium, particularly green aluminium.

Challenges and Opportunities

While the potential is immense, the project also faces several challenges. Beyond environmental pressures related to the initial power source, constructing and operating a large-scale facility in a relatively remote area like KIPI demands high-quality project management, logistics, and human resources. Fluctuations in global aluminium prices and trade policies could also impact the project's profitability.

Nevertheless, with government support and a strong investment commitment, Adaro Minerals is well-positioned to capitalize on the growing global demand for aluminium, especially from emerging industries such as electric vehicles and renewable energy, where aluminium plays a key material role.

Conclusion

PT Adaro Minerals' aluminium smelter project exemplifies the company's long-term vision and commitment to shaping the future of Indonesia's metals industry. With a target to commence initial operations by late 2025 and a clear roadmap towards green aluminium production, Adaro Minerals is not only contributing to economic development but also setting a new standard for sustainable manufacturing in the region. The success of this project will be a significant milestone, not just for Adaro but for Indonesia's entire aluminium industry.

References:

• AlCircle.com
• Metal.com
• Global Energy Monitor
• BankTrack
• IEEFA
• PT Adaro Minerals Indonesia Tbk Financial Reports