Indonesian state-owned construction firm Pembangunan Perumahan (PP) and China Aluminum International Engineering Corporation Limited (CHALIECO) signed the contract on Jan. 11 in Beijing with the smelter’s owner, Borneo Alumina Indonesia (BAI). Construction of the facility is expected to be complete by 2022.

Smelter construction began in December 2019, although BAI’s shareholders initially expected it to begin in late 2018 to meet a 2021 completion date. BAI is a joint venture between the Aluminum Corporation of China Limited (Chalco), state-owned aluminum producer Indonesia Asahan Aluminium (Inalum) and state-owned mining company Aneka Tambang (Antam).

“There was a procedural problem,” Inalum corporate secretary Rendi Witular told The Jakarta Post on Jan. 16 in regards to the construction delay, without elaboration.

Once operational, the Mempawah smelter is expected to produce 1 million tons of alumina each year, at least half of which is to be sold to Inalum. It would replace the state-owned company’s $500 million worth of annual alumina imports. Inalum would then process the alumina into 250,000 tons of aluminum ingots each year for both domestic consumption and export.

Indonesia aims to gain more bang for the buck with its mineral wealth and, thus, the Energy and Mineral Resources Ministry issued a regulation in 2017 that bans the export of all metal ores, except nickel, starting January 2022. The ban forces mining companies to domestically refine such ores, thereby producing higher-value commodities.

An Indonesian counsel to China, Victor S. Hardjono, who witnessed the signing ceremony in Beijing, said in a statement on Jan. 15 that the smelter represented a “long-time dream” of Southeast Asia’s largest economy “to develop an independent aluminum refining industry”.