MIND ID Terminate Contract with Chinese Contractor

BUMN Holding Mining Industry or Mining Industry Indonesia (MIND ID) terminated the cooperation contract with the EPC consortium, namely STATE-OWNED From China, China Aluminium International Engineering Corporation Ltd (Chalieco) and PT Pembangunan Perumahan Tbk (PTPP) after the stagnation of the construction of the Smelter Grade Alumina Refinery (SGAR) Mempawah.

MIND ID Managing Director Hendi Prio Santoso said the mine holding has been trying to find a number of solutions to the disputes faced by the EPC consortium over the past eight months. It’s just that the mediation carried out by MIND ID has not yielded results.

“We are at the very end of it seems that if it is approved by the Ministry of SOEs, we will terminate the contract,” said Hendi during a hearing meeting with Commission VI of the House of Representatives of the Republic of Indonesia, Jakarta, Monday (12/9/2022).

According to Hendi, the EPC contractor objected to continuing the work on SGAR which was included as a national strategic project (PSN) of President Joko Widodo or Jokowi. The reason is that the sustainability of the project will actually harm the company in business.

“The contractor feels that if he continues this he will lose a lot, maybe we have no other choice but to terminate this contract and repeat the process of finding a new contract,” he said.

The delay in the project, which is estimated to reach US$ 1.7 billion with an operating capacity of 1 million tons, was caused by a dispute that occurred from the holders of the EPC consortium, namely a state-owned enterprise from China, China Aluminium International Engineering Corporation Ltd (Chalieco) by 75 percent and the rest pt Pembangunan Perumahan Tbk (PTPP).

The national strategic project was targeted to complete infrastructure construction at least 70 percent by March 2022. However, the dispute hampered smelter work at 13 to 14 percent. As is known, the national strategic project for refining bauxite ore is managed by PT Borneo Alumina Indonesia (PT BAI) whose majority shares are owned by PT Inalum (Persero) as much as 60 percent and the rest Antam with 40 percent ownership.

On the other hand, the Ministry of Energy and Mineral Resources (ESDM) is accelerating efforts to stop the export of clean bauxite or washed bauxite (WBx) which is targeted to be effective in June 2023.

Director General of Minerals and Coal (Dirjen Minerba) of the Ministry of Energy and Mineral Resources Ridwan Djamaluddin said his ministry recently encouraged the development of the construction of processing and refining plants or smelters from holders of clean bauxite mining business permits (IUP) with levels above 42 percent until June 10, 2023.

“Bauxite is clear that the regulations are allowed until June 2023, but it is related to the progress of their smelter construction, which is prohibited from being washed bauxite,” said Ridwan when met at the Indonesian Parliament Building, Jakarta, Tuesday (22/6/2022).

In addition, Ridwan added, aluminum products from bauxite processing will still be exportable even though the ban on the export of clean bauxite is effective in the middle of next year.

“If the aluminum has been processed, yes, it can still be exported,” he said.

Source: https://ekonomi.bisnis.com/read/20220913/44/1576717/smelter-mempawah-mangkrak-mind-id-putus-kontrak-kontraktor-china