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Govt has yet to decide on Inalum

The Indonesian government has not decided whether it will go ahead with its plan to take over the Indonesia-Japan aluminum joint venture PT Indonesia Asahan Aluminum (Inalum)

Nani Afrida (The Jakarta Post)
Jakarta
Mon, March 1, 2010

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Govt has yet to decide on Inalum

T

he Indonesian government has not decided whether it will go ahead with its plan to take over the Indonesia-Japan aluminum joint venture PT Indonesia Asahan Aluminum (Inalum).

"Inalum is still an ongoing issue. We have set up a technical team led by the industry minister. Their review will be presented to us and then we will set up a negotiating team to meet the Japan government," State-Owned Enterprises Minister Mustafa Abubakar told journalists last week.

He said that the negotiating team, representing the coordinating economic ministry, the industry ministry and the state enterprises ministry, would meet the government of Japan in March or April.

"We believe Inalum still has good prospects as it could produce more aluminum for us, which is so important," Mustafa said, adding that the alternative solution to convert Inalum into a state enterprise could also be a good solution.

The government has drafted options on the future of Inalum. One is to take over the aluminum producer when its contract ends in 2013, and the other is to revise the contract to ensure that the project would not only benefit the Japanese investors but also be more beneficial to Indonesia. It is reported that Indonesia seeks a better deal.

According to Mustafa, the technical team is also considering another option to involve the state-owned mining firm Antam alongside Inalum to balance Indonesia's position in the joint venture if the government were to extend the contract.

"This is an option. We want that the Antam involvement would bring us onto an equal footing between Indonesia and Japan," he said.

Mustafa says Antam would be able to invest in Inalum with many advantages for Indonesia, since the country has yet to benefit sufficiently from Inalum production.

So far, Inalum only sells 100,000 tons per year to the domestic market, out of the 250,000 tons of aluminum ingots produced per year.

The remaining production is exported to Japan. The installation was built in 1975 at Asahan, North Sumatra, and opened in 1977,

Inalum is now 60 percent controlled by Nippon Asahan Aluminum (NAA) - a consortium of seven Japanese multinational companies, while the rest of the stake is owned by the government of Indonesia. Inalum's assets are now estimated to be worth more than US$2 billion.

The Asahan Authority, an independent agency assigned to take care of the project, has said Indonesia could own Inalum fully if the government acquired NAA's shares currently valued at between $400 and $500 million.

However, Minister Mustafa acknowledged that Inalum has huge debts with NAA, saying that the government has planned the restructuring of Inalum debts before possibly taking on the company.

"Somewhat before 2013, we would take steps to improve the company's debt position," he said. Previously the Asahan Authority's chief, Effendi Sirait, confirmed that Inalum's debt to the Japan Bank for International Cooperation totaled $226 millions as of March 2009.

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