Smelter Completed in 2024, Adaro Energy Enters Aluminum Industry

TheIndonesia.id - PT Adaro Energy Indonesia Tbk said it would enter the aluminum industry as part of the company's business portfolio diversification. According to the President Director of Adaro Energy Indonesia, Garibaldi Thohir, who is familiarly called Boy Tohir, through the aluminum industry, Adaro is expected to contribute to the development of electric vehicles and electric batteries in the country.

“As soon as possible we will enter the aluminum industry. It is hoped that this year and 2023 the construction of the smelter can start so that in 2024 the construction will be completed," said Boy Tohir during the virtual Ramadan Adaro Gathering, in Jakarta, Monday, April 18, 2022.

Previously, Adaro Energy's subsidiary, PT Adaro Aluminum Indonesia, signed a Letter of Intention to Invest in the amount of Rp 10.4 trillion to build an aluminum smelter in the Indonesian Green Industrial Estate, North Kalimantan. The smelter development is expected to support the downstream program in the mining sector to increase the selling value of the products produced.

Boy Tohir explained that the company's decision to enter the aluminum industry is also in line with Adaro's transformation into four business pillars, namely Coal, Mineral, Clean Energy, and Green Industry. This desire was strengthened when Boy Thohir visited the United States some time ago and saw firsthand a factory that manufactures electric vehicles, most of whose components are made of aluminum.

"Currently there is an electric car technology made from aluminum. As used by the Lucid electric car, everything is aluminum from the engine frame to the car body. So it is very light in weight," he said.

However, he explained, currently, the company's focus is on building a smelter because the investment for the construction of an aluminum smelter is part of supporting the industrial downstream program that has been launched by the government.

The Russo-Ukrainian War Impact

On that occasion, Boy Thohir also talked about the impact of the war between Russia and Ukraine on the company's performance. Due to the Russo-Ukrainian war, coal orders came from several European Union countries, along with the ban on buying coal from Russia.

According to him, coal's limited supply from Russia and Europe has made coal prices hike at a high level. “There have been requests from European Union countries to Indonesia. In my opinion, so far, we thank God," he said.

Orders from Europe were acknowledged by Adaro's Chief Financial Officer (CFO), Lie Luckman, who said that he had delivered 2-3 ships or around 300,000 tons to the Netherlands and Spain. But, Lie Luckman explained that Adaro is still focused on serving the Asian market, the existing buyer of coal from Adaro.

“There is demand from Europe, but our market is Asia. So, we focus on fulfilling our customers who have taken our coal," he said.