On Nov. 27 2017, Inalum was declared a state-owned mining holding company and given the Indonesian government’s controlling shares in metals producer PT Aneka Tambang (ANTM), coal miner PT Bukit Asam (PTBA), tin miner PT Timah (TINS), and gold and copper miner PT Freeport Indonesia (PTFI). The shares transfer was carried out to establish a mining holding company that would also take over divested PTFI shares.

Then on Aug. 17, 2019, Inalum introduced a new entity called Mining Industry Indonesia (MIND ID) to distinguish its functions as a holding company and its aluminum smelting operations. Finally, at a general shareholders meeting (RUPS) on March 21, 2023, MIND ID split off from Inalum as an entirely separate entity named PT Mineral Industri Indonesia to focus on strategic holdings while Inalum focused on its aluminum business.

President Jokowi signed two government regulations (PP) to formalize the restructuring: PP No. 45/2022 on the government reclaiming its shares in ANTM, PTBA, TINS, and PTFI from Inalum, and PP No. 46/2022 on state capital injection into MIND ID by transferring the government’s reclaimed shares in ANTM, PTBA, TINS, PTFI and Inalum.

Inalum is now a subsidiary of MIND ID on the same level with ANTM, PTBA, TINS, PTFI and PT Vale Indonesia (INCO). It focuses on developing the national aluminum industry as well as expanding its business, raising business capital and providing sustainable benefits to all stakeholders.

Meanwhile, as a strategic holding company, MIND ID is focusing on increasing the effectiveness of its strategic activities, its efficiency, increasing the added value of its subsidiaries, managing risk and monitoring its subsidiaries’ operations.

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MIND ID corporate secretary Heri Yusuf says the transformation will help strengthen the company’s governance toward more effective and efficient management of its subsidiaries and investment planning to create greater added value for the group, thereby maximizing its contribution to all stakeholders.

What’s more

An export ban on washed bauxite is set to go into force in June 2023, when a smelter grade alumina refinery (SGAR) in Mempawah, West Kalimantan, was scheduled to start operating. Development on the Mempawah SGAR, with an input capacity of 3 tonnes of bauxite ore and an annual output capacity of up to 1 million tonnes of processed bauxite, was supposed to be 83 percent complete by August 2022. The SGAR project belongs to Inalum-Antam joint venture PT Borneo Alumina Indonesia (PT BAI), and had been designated a national strategic project (PSN) until it was struck from the PSN list after its development stalled.

As of December 2022, development on the Mempawah SGAR was stuck at 18 percent due to an internal dispute at the project’s consortium of engineering, construction and procurement (EPC) contractors: state-owned construction firm PT Perumahan Pembangunan (PTPP) and China Aluminium International Engineering Corporation (Chalieco). However, the two contractors are reportedly committed to completing the project and notable progress has been reported since then. The SGAR is now projected to be fully operational in 2024, with the MIND ID-Inalum split expected to accelerate the refinery’s development.

According to PP No. 45/2022 and PP No. 46/2022, the MIND ID spin-off has resulted in state capital reduction in Inalum amounting to as much as Rp 48.74 trillion (US$3.24 billion) from transferring 15.62 billion B-series shares in ANTM, 4.84 billion B-series shares in TINS and 7.49 billion B-series shares in PTBA, as well as 21,300 shares in PTFI, to MIND ID as the state-owned mining holding company.

MIND ID Boards of Commissioners and Directors

What we’ve heard

An internal source in Inalum said that the plan to separate Inalum from MIND-ID had been planned for a long time, going as far back as the time of the name change from Inalum to MIND-ID.

Initially, Inalum was appointed as the holding company for the mining industry because it was not yet publicly listed on the capital market. Afterward, Inalum was appointed as the parent company in charge of PT Antam, Timah, Bukit Asam, Freeport and Vale Indonesia. Once the split happened, Inalium's position became on a par with other mining holding member companies.

Another source added that this separation was part of the SOEs Ministry's strategy to accelerate Inalum's IPO in the capital market. As part of that strategy, the funds raised from the IPO would then be used to capitalize the company’s projects.

One of them is the acceleration of the the smelter-grade alumina refinery in Mempawah, West Kalimantan. The construction of this smelter is part of President Joko “Jokowi” Widodo's big plan to encourage downstreaming by processing aluminum domestically, while banning the export of raw aluminum materials. The government will ban exports of aluminum raw materials this year, some time after the bauxite exports plan is complete.

In addition, Inalum also plans to accelerate the construction of the Aluminum Remelt IAA and increase the optimization of the smelter in Kuala Tanjung, in North Sumatra.

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