Jakarta. Indonesia’s ban on bauxite exports is driven by the country’s growing need for aluminum and other processed products, Energy and Mineral Resources Minister Bahlil Lahadalia said on Wednesday.

He explained that the government aims to attract billions of dollars in downstream mining investment to add value to the country’s mineral exports.

“We still import many bauxite derivatives like aluminum. Domestic demand is higher than industrial capacity, so we need investors to build bauxite smelters here,” Bahlil said in Jakarta.

According to the minister, Indonesia’s total bauxite smelting capacity currently stands at 17.5 million tons per year, far below domestic requirements.

“Bauxite is one of the key commodities we’re prioritizing for downstream industrialization. That’s why we’ve banned its raw exports,” he added.

The government has set a target of $8 billion in investments for downstream mineral and coal processing, with about $4 billion already realized as of August, Bahlil said.

West Kalimantan, home to one of Indonesia’s largest bauxite reserves, remains underdeveloped in processing capacity. “Most of our bauxite reserves are in West Kalimantan, so smelters should be built there. Our domestic demand remains high, and half of it is still met through imports,” Bahlil noted.

Indonesia officially banned bauxite ore exports in June 2023, following a 2020 law requiring all raw minerals to be processed domestically before export.

The policy mirrors the earlier nickel export ban introduced in 2020, part of Indonesia’s broader “downstreaming” industrialization program now continued under President Prabowo Subianto.

The export bans have reshaped global supply chains for key industrial metals. Indonesia, one of the world’s largest producers of nickel and bauxite, aims to move up the value chain by processing minerals into higher-value products such as batteries, electric vehicles, and aluminum. The strategy has drawn both investment and international scrutiny -- including a World Trade Organization (WTO) dispute with the European Union over nickel restrictions.