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Govt decides to take full control of Inalum
The government plans to take full control of aluminum producer PT Indonesia Asahan Aluminium (Inalum), led by state metal and mineral mining firm PT Aneka Tambang (Antam), a minister says
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he government plans to take full control of aluminum producer PT Indonesia Asahan Aluminium (Inalum), led by state metal and mineral mining firm PT Aneka Tambang (Antam), a minister says.
“We need about US$700-800 million for the takeover. Antam will prepare the funds from its internal reserves and domestic borrowings,” State-Owned Enterprises Minister Mustafa Abubakar said at the State Palace on Thursday.
The amount is far more than an initial estimate mentioned by Coordinating Economic Minister Hatta Rajasa in June.
Hatta said the government estimated the deal would be worth around $220 million, based on the book value of the company in 2013 when the contract is due to end.
Mustafa said the government wanted 100 percent control of Inalum, ending a contract signed in 1976 with Nippon Asahan Aluminum Co. Ltd. (NAA), a consortium of 12 Japanese firms, under which Indonesia owned a 41 percent stake, and the rest was owned by NAA.
The Japanese consortium had already formally submitted a proposal for an extension of the contract.
NAA includes Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Nippon Light Metal Company Ltd., C Itoh & Company Ltd., Nissho Iwai KK, Nichimen Corporation, Showa Denko KK, Marubeni Corporation, Mitsubishi Chemical Industries Ltd., Mitsubishi Corporation, Mitsui Aluminum Co. Ltd. and Mitsui & Co. Ltd.
“Our proposal will be finalized in October and brought to the Coordinating Economic Ministry,” he said.
Last month, Eddy Abdurahman, the secretary to the coordinating economic minister, said the contract would end in 2013, but that the government should decide whether to extend it three years before it was due to end.
Inalum, located in North Sumatra, produced 254,000 tons of aluminum ingots last year, up 3.4 percent from 245,526 tons in 2008.
About 60 percent of Inalum’s output is exported to Japan, with the rest sold to the domestic packaging and transportation industries.
Besides operating an aluminum smelting plant, Inalum also manages two hydropower plants to support its smelter operation. As part of the cooperation, the Japanese and Indonesian governments also established an agency called Otorita Asahan to oversee Inalum’s operation.
After taking over Inalum, Antam would establish a joint-venture firm, involving local government, Mustafa said.
“The local government will have a share [in Inalum],” he said.
Last month President Susilo Bambang Yudhoyono said the government would make a move to “bring maximum real benefits to the central and local government.”
Yudhoyono added that there were already some proceeds from the current partnership, but that there had also been problems and criticisms, however he did not specify what the problems were.
North Sumatra administration has long been pushing for the “nationalization of inalum”, citing minimal benefits gained by the province and 10 cities and regencies under it since the company was established 34 years ago.
PT Toba Sejahtera, a business consortium comprising regional governments and former industry and trade minister Luhut Binsar Panjaitan, was ready to acquire the entire 59 percent stake in Inalum, North Sumatra secretary R.E. Nainggolan told The Jakarta Post on Thursday. Nainggolan said Toba would receive financial backing from BNP Paribas.
