REPUBLIKA.CO.ID, JAKARTA -- United Company Russian Aluminum (UC Rusal) plans to invest US$6 billion for the long-term development of a smelter in Kalimantan, chief economic minister Hatta Rajasa has said.

"Rusal will invest US$6 billion, starting with US$3 billion, for the development of a smelter to process bauxite into alumina," he said, after receiving UC Rusal's CEO, Oleg Deripaska, here on Tuesday.

He said UC Rusal was interested in Indonesia's downstream industrialization program, especially after Law Number 4 of 2009 on minerals and coal was issued to prohibit exports of mining raw materials from 2014.

"Based on the law, as of January, we will no longer be able to export mining raw materials, especially bauxite. So far, we have exported more than 40 million tons of bauxite a year to China. This is, however, not beneficial for value addition," he noted.

Hatta hoped the project could help Indonesia realize its ideal of becoming a base for the aluminum industry and domestic aluminum product development.

"We hope Indonesia will become the base for the aluminum industry. We have PT Inalum, but the company has, so far, imported alumina (raw material), while we have bauxite. In view of that, this smelter could later support Inalum in the production of aluminum," he added.

Hatta said UC Rusal would cooperate with local partner PT Aneka Tambang Tbk in constructing a plant with a production capacity of around 1.8 million tons a year.

He noted that the Russian company expects an assurance from the government on consistency in implementing Law Number 4 of 2009, as well as an environment that aids business and investment in the country.

According to plans, the smelter will begin production in four years. Right now, the Ministry of Industry is assembling a technical team to conduct a feasibility study in cooperation with UC Rusal.

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