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Adaro unit plans $1.1b capex, mostly for smelter

PT Adaro Minerals has announced plans for some US$1.1 billion in capital expenditure (capex) this year, the lion’s share of which is for an aluminum smelter.

Divya Karyza (The Jakarta Post)
Jakarta
Thu, September 15, 2022

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Adaro unit plans $1.1b capex, mostly for smelter

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oal mining giant PT Adaro Energy’s coking coal subsidiary PT Adaro Minerals has announced plans for around US$1.1 billion in capital expenditure (capex) this year, most of which will go into an aluminum smelter project.

Adaro Minerals finance director Heri Gunawan said on Tuesday that the remainder of the earmarked funds would be used to increase mining infrastructure capacity.

The publicly listed company said it aimed to use equity funding and bank loans for its capex.

The aluminum smelter, worth $728 million, will be located at the Green Industrial Park in Bulungan, North Kalimantan, and is expected to begin commercial operations in the first quarter of 2025.

It will run on electricity from renewable sources as the company seeks to tap into the growing global supply chain for green-labeled products.

The Green Industrial Park will draw power from soon-to-be-operational hydropower and solar power plants and will host producers of high-tech and precision products, such as semiconductors, lithium-ion batteries, solar panels, industrial silicon and “green aluminum” – aluminum made using low-emission processes.

Read also: Adaro to build $728m ‘green aluminum’ smelter

“Construction of the aluminum smelter is in line with Indonesia’s goal to [develop] its downstream commodity industry as well as the company’s commitment to [develop the] green economy,” Adaro Minerals investment relations manager Danuta Komar said during a public briefing on Tuesday.

Danuta said he expected increasing mineral and metals demand amid the transition to a green economy, considering that the global investment needs for green economy development and electric vehicle (EV) industries were estimated at $3 trillion and $800 million, respectively, by 2030.

“We are confident that Adaro Minerals is well positioned to harness the enormous opportunities presented by green economy development in the country,” he said.

Adaro Minerals director Wito Krisnahadi said the company targeted production of 500,000 tonnes of aluminum ingot in early 2025 and another 500,000 tonnes by the end of 2026.

“We will prioritize the domestic market to reduce Indonesia’s aluminum imports [...] while the [remainder] of aluminum production will be exported to neighboring countries,” he said, also on Tuesday.

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