Indonesia Smelter Contract In Trouble Thanks To Dispute With Contractors

Indonesia Smelter Contract In Trouble Thanks To Dispute With Contractors

The contract to build a US$831.5 million alumina smelter in Indonesia may be in jeopardy according to statements made at a legislative hearing on Tuesday. However, the push to have the project completed in 2024 still remains.

According to MIND ID director Danny Praditya, the firm must have an agreement in place by next month in order to assure that the project stays on schedule. Currently PT Pembangunan Perumahan, China Aluminium International Engineering Corp Ltd (CHALIECO), and several of the contractors involved in the project have been at loggerheads on the subjects of the value of the contract and various work items.

Meanwhile, Borneo Alumina director Darwin Saleh says that the delays have cost the project hundreds of millions of dollars already.

“Until now there has been a 16-month delay, which we calculate would mean potential revenue loss of $450 million.”

The project kicked off in 2020 with a scheduled completion date this year. However, the ongoing contract disagreement has pushed that date back by a full two years. Praditya testified to the committee that contractors have sought a deadline in 2025, but Borneo Alumina continues to insist upon the previously-agreed-upon concession of a date in 2024.

The project, which is intended for West Kalimantan, consists of a 1 thousand metric tons per annum alumina refinery that is expected to employ almost 900 workers. MIND ID expects to see revenue of US$285 million each year with a profit of US$4.6 million per annum.