Oct 10, 2025 13:27

Indonesia's reinstatement of the mandatory annual RKAB (Work Plan and Budget) approval cycle, effective October 2025, marks a decisive policy reversal to assert direct state control over the mining sector. This shift from three-year planning aims to manage the structural oversupply in the bauxite market where prices of USD 28-30 reflect a 25-30% discount to the official benchmark by enabling precise annual production quotas. The government intends to use this tool to align bauxite output with the scheduled commissioning of 7-8 new alumina refineries requiring over 20 million tons of annual input, thereby forcing market rebalancing and accelerating downstream integration. The success of this high-stakes strategy hinges on mitigating its inherent risks: eroded investor confidence from regulatory volatility and industry consolidation that could reduce market participants by 30-40%, potentially undermining the capital investment required for a globally competitive downstream industry.