ANALYSIS OF THE BAUXITE INDUSTRY CHAIN IN INDONESIA USING A SYSTEM DYNAMICS APPROACH

• Main Author: Ernando, Rully
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/80411
• Institution: Institut Teknologi Bandung

Indonesia is becoming a worthy investment destination in the mining sector. One of the minerals with significant potential in Indonesia to support the economy and attract future investments is bauxite ore. Out of the total mining production, only 8.1 million tons of bauxite ore are further processed by domestic alumina processing plants, while the remaining 20.7 million tons are exported in the form of washed bauxite/metallurgical bauxite. In the current industry condition, Indonesia still needs to import processed products of bauxite ore, including CGA, SGA, aluminum, and other aluminum-based industrial products. In meeting domestic needs, it is necessary to increase the added value of minerals, based on Law Number 3 of 2020 concerning Amendments to Law Number 4 of 2009 concerning Mineral and Coal Mining, in 2023 the government prohibits exports of raw materials or ores or washed bauxite so that processing and refining is necessary beforehand, so this prohibition also encourages companies to carry out downstream programs by building smelting and refining facilities. With the abundant availability of bauxite ore reserves that have not been utilized optimally, further studies are needed because optimal utilization will have a major impact on the economic aspect both in meeting domestic demand for alumina and aluminum as well as state revenues. The approach used in reviewing this research is the System Dynamics (SD) approach. In this study, the model of the aluminum industrial chain system in this study was reviewed from two sides, namely supply and demand. The supply side consists of 4 subsystems, namely the bauxite mining subsystem, alumina processing, aluminum smelters and refineries, as well as the aluminum-based intermediate industry, then the demand side is described in the aluminum consumption subsystem. The result shows that the highest added value is obtained when scenario III is implemented, with an increase in added value of 231% compared to the Business as Usual (BaU) scenario, amounting to USD 10,837,452,000. Furthermore, scenario III is the most optimal scenario because all bauxite can be processed domestically, leading to an increase in industrial capacity, which will impact the higher domestic absorption of smelter & refinery products, essential raw materials for producing intermediate industrial goods.