In-depth Interpretation & Review of Indonesia’s Aluminum Industry Policies Centering on bauxite and extending to the entire aluminum industrial chain, the Indonesian government has rolled out a series of policies focusing on three core dimensions: volume control, pricing mechanisms, and tax rates. These measures aim to gradually improve the regulatory system, standardize industrial development, and accelerate the transformation from raw ore exports to integrated domestic downstream aluminum production. This article sorts out relevant policy details and their impacts in detail as follows: I. Volume Control: Strengthen Quota Management & Full-process Digital Supervision to Achieve Precise Supply Regulation ① Bauxite Quota: RKAB Approval Cycle Adjusted to Enhance Government Regulation Capacity Regulation Capacity Indonesia standardizes the full-process mining and sales of bauxite across all mines via the RKAB (Mining Work Plan and Budget) system. The core policy adjustment focuses on optimizing the approval cycle, mainly based on Permen ESDM No.17/2025 issued by the Ministry of Energy and Mineral Resources (ESDM) on October 3, 2025. New regulations shall be officially implemented starting from 2026: Approval Cycle Revision: The RKAB approval model for all mining enterprises is changed from once every three years to annual application and annual approval. Mines must submit RKAB applications for the next year between October 1 and November 15 each year, with all approvals completed by the end of the year to guarantee orderly production in the subsequent year. Transition & Application Timeline: In Q1 2026, if the new annual RKAB quota is still under review, the original 2026 quota can be adopted temporarily. Quota adjustment applications for the current year shall be submitted by the end of July annually, while the centralized submission window for the next year’s quota is set from October 1 to November 15, forming a dual management model of annual approval plus dynamic adjustment. Scenario Analysis & Policy Impacts Original Three-Year Approval Model: Unable to accurately forecast market demand for the next two years, this model easily triggers supply-demand mismatches and overall oversupply, putting downward pressure on bauxite prices. It also limits flexible government regulation, resulting in significant policy lag as quotas cannot be adjusted timely in response to market changes. New Annual Approval Model: The government gains stronger annual regulatory authority to dynamically adjust total annual quotas based on international bauxite prices, global supply-demand fundamentals and domestic smelting demand, improving price stability. Meanwhile, it strengthens fiscal revenue guarantees and regulatory efficiency through a more transparent and streamlined approval process, reduces rent-seeking behaviors, and advances compliant industrial development. ② SIMBARA System: Full-chain Digital Supervision to Curb Illegal Mineral Trading In accordance with Perpres 94/2025 (Presidential Regulation No.94/2025), the SIMBARA system (Inter-Ministerial Mineral and Coal Information System) officially incorporated bauxite into its regulatory scope in 2025, establishing a full-process digital supervision system covering operations from mines to end users. Through the SIMBARA official portal, the Indonesian government tracks real-time bauxite sales data and monitors the entire transportation chain from mining to downstream processing, including inter-island logistics, with precise linkage to mining quotas. It covers all key links: mining sites, processing, transportation and exports. The implementation of this system not only aligns Indonesian bauxite mining with global industry standards, but also effectively restrains irregular activities such as illegal mining, child labor and environmental damage, promoting green and compliant development of the sector. All bauxite mines are required to submit full-operation documents via the SIMBARA system, including production reports, inventory statements and raw material procurement records, for joint reviews by four core authorities: the Ministry of Energy and Mineral Resources, Ministry of Industry, Ministry of Trade, and Ministry of Transportation. The mechanism realizes data sharing, joint supervision and full traceability. II. Tax Rate: Standardize Billing Rules & Optimize Tax Burden Structure ① Indonesia’s Bauxite Tax Framework: Fixed Fee + Ad Valorem Royalty The country’s bauxite taxation policy adopts a dual structure of fixed administrative fees and floating royalties, clarifying differentiated charging rules for various mining rights. Combined with revisions to the HPM pricing mechanism, the overall tax burden structure has been optimized. Fixed Fee: Paid in a lump sum on an annual basis Core Formula: Fixed Fee = Mining Concession Area × Corresponding Unit Rate Floating Royalty: Charged per sales transaction and highly linked to commodity prices Core Formula: Royalty = Sales Volume × Transaction Price × Applicable Rate Transaction bonuses and premiums shall be included in invoice amounts for unified tax calculation; Pricing benchmark confirmation: If the premium is negative (actual transaction price benchmark price), tax calculation shall adopt HPM plus premium. Calculation Example Assume HPM = USD 44/ton, bauxite indicators: Al₂O₃=49%, Reactive Silica=2%. Actual transaction price: USD 35/ton (Premium = -9 USD/ton), Bonus = USD 1/ton, net transaction price = USD 36/ton. Given the negative premium, royalty is calculated based on HPM: Royalty = 44 USD/ton × 7% (standard bauxite royalty rate) = 3.08 USD/ton. ② Revised HPM Pricing Mechanism Effective April 15, 2026 (Kepmen ESDM No. 144/2026) Core Revisions: Pricing unit adjusted: Dry Metric Ton (DMT) → Wet Metric Ton (WMT) New deduction factor: Reactive Silica (R-SiO₂) New moisture adjustment clause added Regulators require bauxite enterprises to cooperate with inspection institutions and add key indicators including alumina content, reactive silica and moisture content to official Certificate of Analysis (COA). Data updates on the e-PNBP and MVP systems are also mandated to ensure accurate royalty calculation. The revised HPM mechanism lowers benchmark prices and overall royalty costs, reducing comprehensive bauxite mining costs and accelerating mine shipments as well as downstream industrial integration layouts. ③ Optimized HPM Pricing Cycle: Higher Flexibility to Align with Global Markets The pricing cycle has been shortened to reduce policy lag and better reflect LME aluminum price fluctuations. Old Rules (Before March 1, 2025): Monthly single HPM release. The pricing reference window covered the 20th of the month before last to the 19th of the previous month, with a pricing lag of around 45 days, failing to reflect timely international price changes. New Rules (Effective March 1, 2025): Semi-monthly HPM releases on the 1st and 15th of each month. 1st Issue (1st of each month): Calculated by average LME aluminum spot prices from the 5th to the 25th of the prior month (21-day cycle, 5-day lag); 2nd Issue (15th of each month): Calculated by average LME aluminum spot prices from the 26th of the prior month to the 4th of the current month (10-day cycle, 5-day lag). Core Benefits Improved market sensitivity: The shortened cycle enables HPM to reflect real-time LME movements, strengthens linkage with global pricing, and avoids price distortion caused by long-term average calculations; Optimized revenue management: The government can adjust domestic mineral benchmark prices more precisely in response to global aluminum volatility, balancing reasonable profit margins for mining enterprises and stable national tax revenue. III. Pricing Policy: Abolish HPM Floor Price to Boost Market Circulation & Downstream Development A landmark adjustment in Indonesia’s bauxite price regulation is the cancellation of the mandatory HPM minimum settlement price, implemented in phases to balance fiscal revenue and market vitality. Old Regulation (Kepmen ESDM No.72/2025): Bauxite transaction prices were strictly prohibited from falling below HPM. This rule triggered supply-demand imbalance, sluggish ore sales and suspended shipments by major miners, severely restricting normal market circulation. New Regulation (Kepmen ESDM No.268/2025): Signed on August 8, 2025, and officially implemented in late August 2025. The core revision abolishes the HPM floor price and allows transactions below benchmark prices. Nevertheless, taxes and royalties are still calculated based on standard HPM values to shield national fiscal revenue from price declines. Core Advantages of the Revised Policy Government Perspective: HPM-based tax collection guarantees stable fiscal revenue independent of market fluctuations. Loosened price controls revitalize trading activity, resolve the supply glut dilemma, support mine capacity expansion and local employment, and secure long-term industrial stability. Industrial Perspective: Discounted transactions ease inventory pressure for miners and accelerate capital turnover. Lower raw material procurement costs reduce production expenses for domestic smelters, incentivize downstream capacity commissioning, and help Indonesia achieve its 2040 strategic goal of full aluminum chain integration.

[SMM Aluminum Express News] India has approved a broad-gauge rail line linking Tikiri to the Kutrumali and Sijimali bauxite mines in Odisha, boosting upstream logistics for the aluminum sector. The project, granted Special Railway Project status, will be developed under a PPP model with funding support expected from Kalinga Alumina and Vedanta Limited, improving bauxite evacuation and supply chain efficiency.

[SMM Aluminum Express News] PT Antam targets bauxite production of 4.9 million wet metric tons (WMT) in 2026. This represents a 70% increase compared to 2025 production of 2.8 million tons. PT Antam revealed that the 2026 Work Plan and Budget (RKAB) for its bauxite mine at PT Mega Citra Utama (MCU) has not yet received approval from the Ministry of Energy and Mineral Resources (ESDM). The delay is due to the ongoing revision of the Feasibility Study (FS).

[SMM Aluminum Express News] The Ministry of Energy and Mineral Resources (ESDM) has issued Decree No. 144.K/MB.01/MMEM.B/2026 concerning the amendment to Ministerial Decree No. 268.K/MB.01/MEM.B/2025 on the guidelines for determining Harga Patokan Mineral (HPM). The new regulation will take effect on 15 April 2026. Key Changes: 1. Reduction of the reactive silica (R-SiO₂) factor in bauxite HPM calculation. 2. Conversion of HPM unit from USD/DMT to USD/WMT. Urgent Directive for Bauxite Miners (Penambang Bauksit): 1. Immediately coordinate with your surveyor to include Al₂O₃ content, reactive silica (R-SiO₂), and moisture content in the Certificate of Analysis (COA). 2. Update the data in the e-PNBP and MVP applications for accurate royalty calculations.

On March 28th, the EPC (Engineering, Procurement, and Construction) project for the 1 million tons/year mining, production, and operation of the Guizhou Aluminum Group's Zunyi Wuchuan Dazhuyuan Bauxite Mine, undertaken by Guizhou Construction Investment Group Chemical Construction Company, officially commenced. The project is located in Zhuoshui Town, Wuchuan County, within the core area of ​​the Wuzhengdao Bauxite Mine. The geological structure is complex, posing high demands for safety, quality, and organizational management. Chemical Construction Company, leveraging its mature management experience, professional technical team, and strong operational capabilities, undertook the project and continues to strengthen its management team to provide talent and technical support.

SMM Alumina Morning Comment 3.24 Futures: During the night session, the most-traded alumina futures contract AO2605 opened at 3,065 yuan/mt, reaching a high of 3,067 yuan/mt and a low of 3,004 yuan/mt, and closed at 3,021 yuan/mt, down 54 yuan/mt from the previous day. Open interest decreased by 5,855 lots to 241,000 lots, as bulls and bears continued to wrestle in the market. Technically, the closing price was below MA5 (3,046.00), indicating some overhead resistance, but above MA10 (2,995.80) and MA30 (2,880), providing some bottom support. Meanwhile, the MACD indicator DIF (67.07) crossed above DEA (50.91), with the golden cross continuing and the histogram narrowing slightly to 32.32. Upward momentum persisted, and alumina futures are expected to be in the doldrums in the short term. Continued attention should be paid to geopolitical impacts and commissioning plans for new capacity. Industry Updates: 1) India's largest aluminum producer, Vedanta Aluminium, achieved a new emission reduction breakthrough at its Kodingamali bauxite mine by introducing electric loaders, reducing CO2 emissions from loading operations by 50%. The company is currently converting nearly half of its loading fleet from diesel to electric power, supporting its 2050 net-zero carbon emission target. At the Singaramm loading point, the original six diesel loaders were reconfigured to a "three diesel, three electric" setup, reducing carbon emissions by approximately 120 kg per hour. Ore: As of March 23, 2026, the SMM imported bauxite index was at $67.69/mt, up $1.41/mt from the previous trading day. The SMM Guinea FOB average price was at $38.5/mt, unchanged from the previous trading day. The SMM Guinea bauxite CIF average price was at $67/mt, up $0.5/mt from the previous trading day. The SMM Australia low-temperature bauxite CIF average price was at $61.5/mt, up $1/mt from the previous trading day. The SMM Australia high-temperature bauxite CIF average price was at $56.5/mt, up $1/mt from the previous trading day. The Malaysia bauxite CIF average price was at $50/mt, up $2.5/mt from the previous trading day. The Malaysia bauxite CIF (washed) average price was at $60/mt, up $0.5/mt from the previous trading day. The Ghana bauxite CIF price was at $75.5/mt, up $1/mt from the previous trading day. The bauxite CFR (Turkey) price was at $76.5/mt, up $3.5/mt WoW. Domestic ore side, prices remained under negotiation, with some regional differences in ore supply landscape. Imported ore side, affected by rising ocean freight rates and tight fuel supply in Guinea, major mines controlled shipments, and bauxite shipments declined significantly, with cost support bolstering expectations for higher ore prices. However, alumina refinery inventories in China remained at high levels, suppressing procurement demand, and price negotiations between buyers and sellers continued. Short-term ore prices are expected to rise in a stepwise manner, and the market should focus on the implementation of Guinea's "quota system" policy and ocean freight rate trends going forward. Spot Price: As of March 23, 2025, the SMM alumina index was at 2,755.82 yuan/mt, up 8.91 yuan/mt WoW. The SMM Shandong alumina index was at 2,729.35 yuan/mt, up 16.08 yuan/mt WoW. The SMM Henan alumina index was at 2,783.79 yuan/mt, up 8.02 yuan/mt WoW. The SMM Shanxi alumina index was at 2,769.88 yuan/mt, up 9.75 yuan/mt WoW. The SMM Guizhou alumina index was at 2,790.00 yuan/mt, up 4.55 yuan/mt WoW. The SMM Guangxi alumina index was at 2,763.23 yuan/mt, up 1.91 yuan/mt WoW. Spot-Futures Price Spread Daily Report: According to SMM data, on March 23, the SMM alumina index was at a discount of 338.18 yuan/mt against the most-traded contract based on the latest transaction price at 11:30 AM. Warrant Daily Report: On March 23, total registered alumina warrants increased by 6,274 mt from the previous trading day to 405,400 mt. Shandong region alumina warrants remained unchanged at 36,152 mt. Henan region alumina warrants remained unchanged at 6,011 mt. Guangxi region alumina warrants remained unchanged at 28,000 mt. Gansu region alumina warrants remained unchanged at 49,500 mt. Xinjiang region alumina warrants increased by 6,274 mt from the previous trading day to 286,900 mt. Markets Outside China: As of March 23, 2026, the FOB Western Australia alumina price was $302/mt, the ocean freight rate was $34.55/mt, and the USD/CNY selling rate was around 6.93. This translated to a selling price at major domestic ports of approximately 2,714.39 yuan/mt, which was 41.43 yuan/mt below the alumina index price. According to the SMM model, the import window was open. Summary: Supply side, the industry operating rate declined by 0.6 percentage points last week, and operating capacity continued to decrease. Weekly alumina production decreased by 9,000 mt this week. Inventory side, as of last Thursday, alumina market inventory saw a buildup of 18,000 mt WoW, mainly due to a notable increase in warrant volumes. Aluminum smelters continued to draw down their raw material inventories, which decreased by 6,000 mt this week. Overall raw material procurement sentiment was lukewarm, with some enterprises actively destocking after Chinese New Year. Alumina refinery finished product inventories decreased by 8,000 mt, mainly due to a slight decline in alumina operating capacity. Port inventory edged down by 3,000 mt this week, but a large volume of imported alumina is reportedly set to arrive at ports, and inventory may shift back to buildup. Futures-linked inventory rose significantly — with futures at a substantial premium to spot, some alumina was registered as warrants. SHFE warrant inventory saw a buildup of approximately 57,000 mt WoW, while in-transit and platform inventory declined by 23,000 mt. Overall, national alumina inventory rebounded slightly this week, but the destocking trend since March has not yet reversed. According to the SMM survey, some new alumina projects in Guangxi are expected to successively enter trial production and formal commissioning, and their commissioning progress warrants close attention going forward. [Data other than publicly available information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]

SMM Alumina Morning Comment 3.23 Futures: Last Friday during the night session, the most-traded alumina futures contract AO2605 opened at 3,055 yuan/mt, reached a high of 3,103 yuan/mt, hit a low of 3,027 yuan/mt, and closed at 3,088 yuan/mt, up 83 yuan/mt from the previous day. Open interest increased by 8,658 lots to 254,500 lots. Bullish sentiment was strong in the current market, mainly due to frequent supply disruptions of raw material ore and tight alumina supply within the region. From a technical perspective, the closing price was above MA5 (3,055.40), MA10 (2,977.10), and MA30 (2,871.53), providing certain bottom support. Meanwhile, the MACD indicator DIF (68.27) crossed above DEA (46.79), with the low-level golden cross continuing and the histogram at 42.95, indicating that upward momentum remained. Alumina futures are expected to be in the doldrums in the short term, and continued attention should be paid to geopolitical impacts and commissioning plans for new capacity. Industry Updates: 1) According to foreign media, Rio Tinto temporarily shut down two bauxite mines, Amrun and Andoom, in northern Queensland, Australia, due to a tropical cyclone, involving capacity of 30 million mt. Ore: As of March 20, 2026, the SMM imported bauxite index was at $66.28/mt, unchanged from the previous trading day. The SMM Guinea FOB average price was at $38.5/mt, unchanged from the previous trading day. The SMM Guinea bauxite CIF average price was at $66.5/mt, unchanged from the previous trading day. The SMM Australian low-temperature bauxite CIF average price was at $60.5/mt, unchanged from the previous trading day. The SMM Australian high-temperature bauxite CIF average price was at $55.5/mt, unchanged from the previous trading day. The Malaysia bauxite CIF average price was at $47.5/mt, unchanged from the previous trading day. The Malaysia bauxite CIF (washed) average price was at $59.5/mt, unchanged from the previous trading day. The Ghana bauxite CIF price was at $75.5/mt, unchanged from the previous trading day. The bauxite CFR (Turkey) price was at $76.5/mt, up $3.5/mt from last Friday. Domestic ore side, prices remained under negotiation, with certain differences in ore supply landscapes across regions. Imported ore side, affected by rising ocean freight rates and tight fuel supply in Guinea, major mines controlled shipments, and bauxite shipments declined significantly, with cost support underpinning bullish expectations for ore prices. However, alumina refinery inventories in China remained at high levels (approximately 96 days), suppressing procurement demand, and price negotiations between buyers and sellers continued. Short-term ore prices are expected to rise in a stepwise manner, and the market should focus on the implementation of Guinea's "quota system" policy and ocean freight rate trends going forward. Spot Price: As of March 20, 2025, the SMM alumina index was at 2,746.90 yuan/mt, up 10.23 yuan/mt MoM. The SMM Shandong alumina index was at 2,713.27 yuan/mt, up 12.35 yuan/mt MoM. The SMM Henan alumina index was at 2,775.76 yuan/mt, up 6 yuan/mt MoM. The SMM Shanxi alumina index was at 2,760.13 yuan/mt, up 16.15 yuan/mt MoM. The SMM Guizhou alumina index was at 2,785.45 yuan/mt, up 15.89 yuan/mt MoM. The SMM Guangxi alumina index was at 2,761.32 yuan/mt, up 5.81 yuan/mt MoM. Spot-Futures Price Spread Daily Report: According to SMM data, on March 20, the SMM alumina index was at a discount of 286.1 yuan/mt against the most-traded contract's latest transaction price at 11:30 AM. Warrant Daily Report: On March 20, total registered alumina warrants increased by 8,686 mt from the previous trading day to 399,100 mt. In Shandong, total registered alumina warrants remained unchanged from the previous trading day at 36,152 mt. In Henan, total registered alumina warrants remained unchanged from the previous trading day at 6,011 mt. In Guangxi, total registered alumina warrants increased by 3,009 mt from the previous trading day to 28,000 mt. In Gansu, total registered alumina warrants increased by 9,583 mt from the previous trading day to 49,500 mt. In Xinjiang, total registered alumina warrants decreased by 897 mt from the previous trading day to 280,600 mt. Markets Outside China: As of March 20, 2026, the FOB Western Australia alumina price was $302/mt, the ocean freight rate was $34.55/mt, and the USD/CNY selling rate was around 6.91. This price was equivalent to a selling price at major domestic ports of approximately 2,708.76 yuan/mt, which was 38.14 yuan/mt below the alumina index price. Summary: As of last Thursday, the alumina market saw an inventory buildup of 18,000 mt WoW, mainly due to a notable increase in warrant volumes. Supply side, the industry operating rate declined by 0.6 percentage points this week, and operating capacity continued to decrease, with weekly alumina production down by 9,000 mt this week. Inventory changes: Aluminum smelters continued to draw down their own raw material inventories, which decreased by 6,000 mt this week. Overall raw material procurement sentiment was lukewarm, with some enterprises actively destocking after Chinese New Year. Finished product inventories at alumina refineries pulled back slightly, mainly due to a slight decline in alumina operating capacity, down by 8,000 mt. Port inventory decreased slightly by 3,000 mt this week, but reportedly large volumes of imported alumina are expected to arrive at ports subsequently, and inventory may shift back to buildup. Futures-related inventory rose significantly, as futures traded at a substantial premium to spot, and some alumina was registered as warrants. SHFE warrant inventory saw an inventory buildup of approximately 57,000 mt WoW this week, while in-transit and platform inventory declined by 23,000 mt. Overall, nationwide alumina inventory rebounded slightly this week, but the destocking trend since March has not yet reversed. Some new alumina projects in Guangxi are expected to successively enter trial production and formal commissioning, and subsequent commissioning progress should be closely monitored, as it will become a key variable affecting inventory changes. [Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]

[SMM Aluminum Express News] The Indonesian Bauxite Association urges all bauxite miners to pay attention to current challenges: global uncertainty, rising diesel prices, increasing operating costs, 2026 RKAB approvals, rising aluminum prices, tax burdens (incl. HPM), and stricter regulations. In response to these challenges, the Chairman of the Indonesian Bauxite Association urge all bauxite mining operators to renegotiate contracts periodically and suggest using the HPM as a benchmark price.

[SMM Aluminum Express News] Indonesian bauxite mines generally observe the national public holidays (libur nasional) and collective leave days (cuti bersama) in March 2026, as confirmed by industry players, though exact implementation varies by company policy (e.g., essential operations like maintenance or shifts may continue with adjustments). This creates a potential 7-day extended break (18–24 March), aligning with government SKB (joint ministerial decree) on holidays and cuti bersama for 2026.

The Indonesian aluminum market remained stable during the 2026 Chinese New Year, with production unaffected and bauxite prices holding at USD 28–32 FOB amid RKAB uncertainty. Alumina prices also stayed steady at USD 308 FOB due to feedstock stability and a seasonal lull in Chinese buying activity.