Indonesia doubles down on coal to power its aluminum expansion
Summary
Indonesia is increasing its aluminum production to take advantage of disrupted global supplies caused by the Iran war. To power new aluminum smelters, Indonesia is relying heavily on its coal resources, which may increase carbon emissions despite global efforts to reduce pollution.Key Facts
- The Iran war has reduced aluminum production in the Middle East by about 44% this year compared to 2025.
- Prices for aluminum rose sharply due to supply disruptions, reaching $3,780 per metric ton in June before settling near $3,400.
- Indonesia plans to quadruple alumina output to 32.5 million metric tons and increase aluminum production from 1 million metric tons in 2025 to 14.5 million metric tons by 2030.
- Aluminum smelting uses a lot of energy and requires a supply of refined alumina from bauxite ore.
- China, which produces 60% of the world’s aluminum, supports Indonesia’s expansion as it wants to reduce its own smelter pollution.
- About 75% of Indonesia’s planned aluminum projects involve Chinese investment.
- Indonesia is building “captive coal” power plants that provide electricity only for aluminum smelters, increasing reliance on coal and potential carbon emissions.
- Limited public information exists on pollution levels from these private off-grid coal plants.
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