Aluminium
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Aluminium Industry Profile: Southeast Asia
September 2021
Southeast Asia is home to significant bauxite reserves which have, until relatively recently, mostly been exported as raw ore to China as the country grew domestic refining capacity to meet its smelter capacity developments. China’s alumina refineries have increasingly looked to external sources of bauxite due to the restrictive processing costs of its domestic diasporic reserves. With significant bauxite reserves, prior to export bans, both Indonesia and Malaysia became significant suppliers on the seaborne bauxite market.

More recently, southeast Asian countries have looked to develop their own domestic aluminium industry to add value to their natural resources and take advantage of globally competitive energy sources.

 

 

Bauxite Export Bans

Indonesia

To encourage the development of a domestic minerals processing industry, Indonesia put in place a ban on raw ore exports, including bauxite and nickel, in early 2014. While a significant number of nickel processing plants have been established, alumina refining capacity has been slower to develop. In early 2017, Indonesia announced a relaxation of the export ban, and export licences were granted to companies demonstrating progress in developing domestic refining capacity.

The expansion of the Well Harvest refinery and greenfield development of refineries on Bintan Island and another in Kalimantan have provided opportunities for associated bauxite miners to make ore exports. A planned re-introduction of the export ban has been recently pushed out to mid-2023.

 

Malaysia

Following the export ban in Indonesia, Malaysia rapidly became one of the largest exporters of bauxite to China. However, at the start of 2016, Malaysia put in place a moratorium on bauxite mining in response to poor mining practices in the essentially unregulated industry around Kuantan, which resulted in contaminated waterways and increasing local opposition to mining activity.

Exports to reduce port stockpiles continued while a government approved Standard Operating Procedure (SOP) and regulation framework was implemented. Illegal mining is assumed to have continued, with exports not being matched by reduction in stockpiles while the moratorium was in place.

Malaysia has since lifted the export moratorium but has been slow to issue new mining licenses. Volumes from Malaysia have largely been filled by Guinea exports over which Chinese companies hold control. Malaysia has not pursued domestic bauxite processing developments, and remaining reserves are believed to be limited.

 

Vietnam

The USGS currently ranks Vietnam to have the third-largest reserves of global bauxite behind Guinea and Australia, however, the establishment of a domestic aluminium industry in the country is a relatively recent development. Vietnam has a blanket ban on the export of bauxites from its gibbsitic resources in the central highlands.

Exports of bauxite out of North Vietnam have been recorded, however it is understood these have been of diasporic bauxite for processing in Southern Chinese refineries. AME expects the ban on gibbsitic bauxite exports to remain in place, with all material to be processed at the Tan Rai and Nhan Co refineries which came into production in 2013 and 2016, respectively, and which retain potential for expansion.

 

Alumina Refineries

Indonesia 

Relaxation of the 2014 ban on raw mineral ore exports only allows exports to be undertaken by companies able to demonstrate they are actively operating or developing an in-country processing facility. Currently, the only operating refineries in Indonesia are the PT Winning Well Harvest refinery—recently expanded to 2Mtpa—and the 300ktpa Tayan CGA refinery.

A number of other refinery projects have gradually progressed in Indonesia, including the recently commissioned 1Mtpa PT Bintan Alumina refinery in the Riau Island province and the 1Mtpa Borneo Alumina (Mempawah) project in West Kalimantan, being constructed by state-miner Antam/Inalum and expected to start producing next year. The Borneo Alumina project is expected to secure raw material for Antam’s domestic smelter capacity, both existing and planned.

The Bintan project is a joint venture with Chinese company Shandong Nanshan Aluminium and has a 25% ownership share with Malaysia’s Press Metal. Beyond the Press Metal share, which will be sent to the company’s smelters in Sarawak, alumina from Bintan is expected to be destined for China. New alumina refining capacity development is also possible with Tsingshan’s proposed smelter at Morowali, should the company look to replicate its fully integrated nickel ore to stainless steel strategy.

 

Vietnam

In Vietnam, the 650ktpa Nahn Co. and Tan Rai refineries, developed by the Vietnam National Coal and Minerals Industries Group (Vinacomin), are operating at capacity in the central highland region. With bans on the export of gibbsitic bauxite, utilisation of the resource requires domestic development of refining capacity and expansions of both refineries to 1.3Mtpa are expected in the medium term. While other greenfield projects have previously been proposed, the government put a moratorium on their development following start-up issues at the Tan Rai refinery. Expansion of the existing plants is considered more likely, though it may be delayed, with domestic smelting capacity yet to be realised.

 

Malaysia

Malaysia currently has no domestic alumina refineries and AME is not currently tracking any potential developments. While Malaysia was briefly the largest bauxite exporter to China, total resources in the country likely make it hard to economically justify developing a domestic refinery. As the sole domestic aluminium producer, with significant smelting capacity, Press Metals Bhd would be considered most likely to pursue a refinery development, but it has opted to partner in refineries in Australia and Indonesia. Malaysia’s current alumina demand is fully met by imports, primarily from Australia and now Indonesia. Any refinery development would have to compete economically with Press Metals’ current importing arrangements.

 

Aluminium Smelters

Indonesia

Utilising hydroelectricity sources in the region, the 250ktpa Asahan smelter in North Sumatra, owned by state-run PT Inalum, currently runs the only operational aluminium smelter in Indonesia. It has focused on increasing its product diversity, now producing a range of billet and alloys. Advanced plans currently exist to increase capacity of the Asahan site, while coal fired power stations are also planned in the region to provide power security.

With regard to new smelting projects, China’s Shandong Nanshan Aluminium has plans for a vertically integrated bauxite to aluminium development on the Riau Islands. It started related port works in 2015-16 and started commissioning of a refinery in 2021—a planned smelter may follow. Antam has also flagged a greenfield 500ktpa smelter project in North Kalimantan which is dependent on the development of the region’s hydroelectric potential and could be expected in the medium term.

More recently, nickel and stainless-steel behemoth Tsingshan announced it was teaming up with Huafeng Group to develop up to 1Mtpa of aluminium smelting capacity alongside its Morowali nickel hub, leveraging off established power infrastructure. Tsingshan’s timeline suggested a start-up year of 2023.

 

 

Malaysia

Currently the only aluminium producer is Press Metals Bhd with its original operation at Mukah and the three phases of its Bintulu development, both in Sarawak. Press Metals is in the process of commissioning the third 320ktpa potline at the Bintulu operation, which will raise the company’s total capacity to over 1Mtpa across both sites. With ready access to cheap hydropower supplies planned for development, a number of smelter projects have been flagged within Malaysia in the past.

By 2015, the Malaysian government had issued four smelter construction licences, two of which are allocated to Press Metals, however, the remaining two were issued to the Smelter Asia Sdn Bhd and Leader Universal Aluminium Sdn Bhd consortiums, neither of which have progressed.

 

Vietnam

Pursuing the development of a fully integrated domestic aluminium industry, Vietnam is currently constructing its first smelter project, the 450ktpa Tran Hong Quan smelter project adjacent to the Nhan Co. refinery operation. Difficulties operating in the highland environment and potential political issues have resulted in the project taking longer than initially planned. It remains under construction.

Given ready access to coal-power and government support for developing the full value chain, a second smelter project in Vietnam is expected in the medium term, likely to be undertaken by Vinacomin, which had previously flagged the Dongyang smelter development, though progress has been slow.

The number of likely and potential developments across the aluminium value chain in the SEA region could see up to 4.4Mtpa of aluminium production capacity.