Business & Finance
Indonesia expands aluminum production with new captive coal power facilities
Capitalizing on Middle East supply disruptions caused by the Iran war, Indonesia is pursuing a dramatic increase in aluminum smelting reliant on off-grid coal plants.
The short version
- Indonesia aims to increase aluminum output from 1 million metric tons in 2025 to 14.5 million metric tons by 2030, supported by extensive Chinese investment.
- The expansion relies heavily on off-grid captive coal power plants, raising environmental concerns and conflicting with national emissions targets.
- Global aluminum prices rose sharply after war in Iran reduced Middle Eastern production, creating market opportunities for Southeast Asian producers.
- Environmental researchers warn that planned production targets could deplete Indonesia's domestic bauxite reserves in under 12 years.
Key facts
- Indonesia plans to expand aluminum production to 14.5 million metric tons by 2030, up from roughly 1 million metric tons in 2025.[Associated Press]
- The Centre for Research on Energy and Clean Air is tracking 32 planned off-grid coal facilities intended solely to supply power to Indonesian aluminum smelters.[Associated Press]
- Fastmarkets estimates Middle Eastern aluminum output will decline 44% this year compared to 2025 due to war-related disruptions in Iran and surrounding areas.[Associated Press]
- Chinese firms have invested $5.5 billion to $6 billion in Indonesia's aluminum sector, with projections reaching $30 billion by 2030.[Associated Press]
- Aluminum prices peaked at $3,780 per metric ton in June following conflict-driven supply cuts, up from pre-war levels around $3,150 to $3,250.[Associated Press]
What remains uncertain
- Public tracking and data regarding greenhouse gas emissions from off-grid captive coal plants in Indonesia remain limited.[Associated Press]
- It is unknown what specific end products will utilize aluminum produced from coal-powered Indonesian smelters.[Associated Press]
Sources
- Indonesia doubles down on coal to power its aluminum expansionAssociated Press