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Fastmarkets understands that the smelter, which is expected to cost $3 billion, will be situated in the Weda Bay Industrial Park, has an anticipated capacity of 800,000 tonnes per year and will be constructed in two equal stages.
The $3 billion smelter would be the latest addition to aluminium production in Indonesia, where output is currently expected to reach 1.98 million tonnes per year by the end of 2026, according to Fastmarkets analysts.A source told Fastmarkets said that while it was too soon to say exactly when construction might start, “an optimistic estimate is that production will begin in two years.”
“[It’s a] big project, but I believe Tsingshan can [build] it in one to two years,” a trader said.
Indonesia has seen significant Chinese investment in its aluminium industry, with Tsingshan having already partnered with the Huafon Group and Xinfa to build aluminium smelters in the country.
The Tsingshan-Xinfa Juwan smelter, whiich is also located in the Weda Bay Industrial Park, will have an annual capacity of 250,000 tonnes per year, and the Tsingshan-Xinfa Taijing smelter in the Indonesia Morawali Industrial Park in Central Sulawesi, has a planned annual capacity of 180,000 tonnes per year. Both smelters are expected to begin operations in 2026.
The joint venture between Huafon Group and Tsingshan, Huaqing Aluminium, is located in Qingshan Industrial Park, Indonesia, and is currently producing 500,000 tonnes per year, Fastmarkets understands.
Indonesia’s total exports of unwrought and unalloyed aluminium amounted to about 511,178 tonnes in 2025, with approximately 40.27% of this directed toward China, according to National Export Import Data from BPS-Statistics Indonesia.
“The majority of aluminium produced is for the domestic market, with limited capacity left for exports,” a market participant said.
Fastmarkets’ assessment of the aluminium P1020A premium, fob Indonesia was $320-330 per tonne on April 15, unchanged from the previous week.
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Sources said that interest in Indonesian-origin aluminium had recently picked up amid tightening aluminium supplies and disruption linked to the Middle East conflict, which was sparked by the US/Israel attacks on Iran and its wide-spread response across the region, including the blockade of the Strait of Hormuz.
“Purchasing managers are looking to diversify their portfolios,” a European trader said.
Major smelters in the Middle East have been directly affected by the conflict, including Emirates Global Aluminium (EGA), which has declared force majeure; Aluminium Bahrain (Alba), which reduced production significantly following a missile strike by Iran; and Qatalum, which is currently operating at 60% capacity.
Total affected smelter capacity in the Middle East is expected to fall to 3.445 million tonnes in 2026, down by around 44% from 6.151 million tonnes in 2025, according to Fastmarkets analyst Rory Deng.
European aluminium premiums have increased amid these supply pressures, with big increases seen in the P1020 premium and aluminium billet premiums.
“From a pricing perspective, the aluminium market remains highly headline driven and at the mercy of developments emerging from the Middle East,” according to Fastmarkets analyst Andy Farida.
“Under certain escalation scenarios, prices of $4,000 per tonne appear achievable – and even $5,000 per tonne cannot be ruled out,” he said.
“What is clear, is that London Metal Exchange aluminium prices, and regional premiums, are likely to retain strong bullish momentum in the near term, supported by acute supply constraints and elevated geopolitical risks.“ Farida added.
Fastmarkets analyst Andy Farida will be speaking at the Fastmarkets International Aluminium Conference in Budapest, Hungary, on September 15-17.