The new aluminum smelter is planned to be built in a new industrial park. Credit: THAM YUAN YUAN/Pixabay.

Indonesian coal company PT Adaro Energy, through its subsidiary PT Adaro Aluminium Indonesia, has signed a letter of intent to construct a $728m aluminum smelter.

The smelter is planned to be built in a new industrial park in North Kalimantan Province on the island of Borneo. The park is being developed by the Indonesian government.

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Adaro Energy vice-president Ario Rachmat was cited by Nikkei Asia as saying: “Adaro is committed to transform its businesses through green initiatives in the long term.

“We are optimistic that global demand for aluminum products will keep rising, particularly for cables, batter[ies], and chassis.”

The firm plans to team up with undisclosed domestic and international partners, to complete the proposed aluminum project.

Rachmat told Nikkei Asia that the company would take two years for the completion of construction on the smelter, which will be equipped to produce aluminum ingots or sheets.

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Adaro Energy CEO and President Director Garibaldi Thohir was cited by the news agency as saying that the firm is weighing the development of a “new energy battery factory” in the same location.

Thohir added: “We’re hoping to support the government’s efforts to push for the development of the electric vehicle ecosystem and also to contribute to the development of renewable energy in Indonesia.”

In Indonesia earlier this year, PT Vale Indonesia (PTVI), Taiyuan Iron & Steel Group (TISCO), and Shandong Xinhai Technology (Xinhai) teamed up to build and operate the Bahodopi processing facility.

The facility will produce stainless-steel raw material nickel pig iron (NPI).