Indonesia's Antam to Start Building Alumina Plant in 2011

LONDON, Sep. 2 --  State miner PT Aneka Tambang Tbk (ANTM.JK) said on Wednesday it will start construction of an alumina plant in West Kalimantan in the first quarter of next year, which would boost its alumina production.

The plant, Tayan CGA, is expected to produce 300,000 tonnes of chemical grade alumina which is used for chemical products such as paints. It is expected to start commercial production in 2014, Antam said in a statement.

"The Tayan CGA project will add value to Antam's vast bauxite reserves," the firm said, adding that about 200,000 tonnes of the alumina produced will be used by Japan's Showa Denko (4004.T) which has a 20 percent stake in the project, for its plant in Yokohama.

Antam, which has an 80 percent stake in the project, will take the rest of the production and sell it in the local market. The firm is keen to diversify its mining products to reduce the risk from volatile metals prices.

Antam started commercial production of its Tayan bauxite mine -- the firm's largest bauxite reserve -- in Sanggau district in West Kalimantan province on Borneo island last year. The mine has 100 million metric tonnes of bauxite, the raw material for making alumina.

For construction of the plant, Antam has signed an engineering, procurement and construction contract with state-owned construction firm PT Wijaya Karya Tbk (WIKA.JK).

Antam, which is 65 percent-owned by the Indonesian government, is involved in the exploration and production of nickel ore, bauxite and iron sands, smelting of ferro-nickel, and exploration, production and refining of gold and silver.