T

he government is set to take full control over aluminum producer PT Indonesia Asahan Aluminium (Inalum) and then float the company on the stock market or offer it to investors after the acquisition, Industry Minister MS Hidayat said in Jakarta on Friday.

Hidayat said that official deliberations for the acquisition of the Japanese consortium’s shares in the aluminum producer would be carried out between August and September this year.

“The official takeover signing is expected to take place in October. Afterwards, we are going to carry out a transition period until 2013,” Hidayat said.

Hidayat said the state, through the Finance Ministry, would prepare Rp 7 trillion (US$742 million) in funds to complete the takeover. “As of now, Rp 2 trillion is available, while another Rp 5 trillion will be disbursed next year,” Hidayat said.

Hidayat said that the funding for the Inalum takeover would come from the state budget and therefore, the disbursement of the funds had to be discussed with the House of Representatives to gain approval.

Coordinating Economic Minister Hatta Rajasa said that the government had planned to establish a new business unit to operate the aluminum plant after the takeover was completed and then offered its shares in an initial public offering (IPO).

“Our main goal is to enter the stock market,” Hatta said.

Inalum was set up in 1976 through an agreement between the government and its Japanese counterpart. The company runs the only aluminum smelter in Southeast Asia, in Asahan, North Sumatra, and utilizes hydropower plants Asahan I and Asahan II, as its prime energy sources.

The agreement stipulated that the Indonesian government had the option of taking over Inalum when the contract expired in 2013.

The smelter commenced operations in 1983 and produces 250,000 tons of aluminum ingots per annum. Inalum allocates only 40 percent of production for the domestic market, while exporting the remainder to Japan.

The Indonesian government has a 41.12 percent stake in Inalum, while NAA, a consortium of 12 Japanese companies, including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Mitsui Aluminium Co. Ltd. and Mitsubishi Corporation, holds 58.88 percent.

Inalum’s assets are worth about US$1.23 billion, and with this assumption the value of the consortium’s stake that will be acquired by the government is about $723 million.

The Japanese consortium had previously expressed its wish for a contract extension by offering a commitment to increase its yearly production capacity to 317,000 tons.

Finance Minister Agus Martowardojo said that once the takeover was completed, the government planned to conduct an open tender to offer the aluminum producer’s shares to institutional investors.

State-owned Enterprises Minister Dahlan Iskan previously said that there were many companies, both local and foreign, that had expressed their interests in investing in Inalum after the takeover was completed.

Dahlan said that Indian and Japanese companies had expressed their interests to invest in Inalum shares, while in terms of local players, companies such as PT Aneka Tambang (Antam) and PT Toba Bara Sejahtera had also expressed similar interests.