T

he government and Japanese shareholders of PT Indonesia Asahan Aluminium (Inalum), which operates Southeast Asia'€™s only aluminum smelter, have in principal agreed on a provisional price for the firm'€™s assets and a mechanism for ownership transfer.

Coordinating Economic Minister Hatta Rajasa said Wednesday that both parties gave the nod to the US$556 million figure set as the tentative valuation of Inalum assets before an audit by independent analysts would determine the exact valuation.

'€œIf the audit finds the real value is $20 million more than or less than the provisional price, we [both parties] will settle the issue with an international arbitration body,'€ Hatta told reporters.

'€œBut, we believe that the value gap will not exceed the limit.'€

Hatta declined to specify when the audit would begin, but said it would be carried out '€œas soon as possible'€.

The latest negotiation, which took place Tuesday in Singapore between the government and Inalum'€™s Japanese shareholder Nippon Asahan Aluminium (NAA), also approved a shares transfer as the method of ownership change, instead of a transfer of assets as stipulated under their cooperation master agreement, according to Hatta.

Founded in 1976, North Sumatra-based Inalum was originally 41.12 percent controlled by the Indonesian government and 58.88 percent by the Japanese consortium, which comprises 12 Japanese firms including Sumitomo Chemical Co. Ltd. and Mitsubishi Corporation.

The firm, which began operating in 1983, produces 250,000 tons of aluminum ingots annually, 60 percent of which are shipped to Japan.

Under the master agreement, the 30-year contract between Indonesia and the consortium was set to expire on Oct. 31 this year, with the Indonesian government assuming ownership via an assets transfer.

The takeover would mean a lot to the government, which aims to fully determine the operations of the smelter to spur growth in the domestic downstream industry and give more added value to its natural resources.

Both parties have been in intensive talks regarding the ownership transfer since early this month, when Inalum assets officially returned to the Indonesian government.

The Japanese shareholders had repeatedly threatened to appeal to the International Center
for Settlement of Investment Disputes following Indonesia'€™s attempt to base the valuation of
Inalum'€™s assets on a more recent audit.

The assets were previously valued at $558 million by the Development Finance Comptroller (BPKP) based on an audit of the past fiscal year concluding March this year.

Agus Tjahjana, the Industry Ministry'€™s director general for international industry cooperation, which represented the government in the negotiations, said the shares transfer at the provisional price would happen soon to allow the immediate transfer of the firm'€™s ownership.

'€œWe will later pay any price gap shown in the results of the final audit,'€ he told The Jakarta Post.