I

ndonesia has since November not exported aluminum ingots produced by PT Indonesia Asahan Aluminium (Inalum) to Japan, and will no longer do so after the signing of a share transfer deal on Thursday.

It was a milestone in the history of the country'€™s resources industry, with the government officially taking over Southeast Asia'€™s only aluminum smelter through the deal, which was signed by State-Owned Enterprises Minister Dahlan Iskan and Japanese shareholder Nippon Asahan Aluminium (NAA) representative Hiroshi Haruta, who acted as Inalum finance director.

'€œWe will be using 100 percent of our products on the domestic market,'€ said Sahala Sijabat, who now helms Inalum as president director, saying that Japan had been Inalum'€™s traditional market.

He said Inalum had stopped exporting its products to Japan in November after a master agreement between the government and NAA expired at the end of October.

The share deed agreement on Thursday officially ended NAA'€™s 30-year ownership of the smelter, which is located in Asahan, North Sumatra.

Indonesia had declined to extend the master agreement, and the two sides eventually agreed to part ways, with Indonesia paying US$556.7 million for the 58.88 percent Japanese share.

With the share deed agreement, Inalum is now wholly owned by the Indonesian government and
comes under the direct supervision of Dahlan.

Dahlan said a board of directors would be formed at the next shareholders meeting.

He also said that the government was offering the Asahan administration 30 percent of Inalum shares following the signing of the deal.

'€œBut it'€™s up to the administration, whether it will take them or not,'€ he said.

Indonesia sold 60 percent of total aluminum ingots produced by Inalum, which was established in 1976 and has operated since 1983, to Japan at a special price, while importing aluminum from Australia and China.

The government aims to more than double Inalum'€™s production capacity from the current 250,000 metric tons of aluminum ingots per year by 2017, to meet some of the domestic demand, which amounts to 600 metric tons per year.

Sahala said more power plants would be built to enable the company to produce more aluminum.

'€œWe will invest between Rp 2 trillion [$164 million] and Rp 3 trillion for two new steam power plants with a 3 by 200 megawatt capacity,'€ he said.

Sahala said the company would also soon expand its port capacity to 35,000 tons, from the current 25,000 tons.

He said that the company would diversify its products by producing billets and alloy, as well as sell baked carbon anodes, within two years.

The company would also include state-owned miner PT Aneka Tambang (Antam) in the Mempawah project in West Kalimantan, he added.

'€œParticipating in the project is very important because Antam will have a smelter grade alumina [SGA] plant that can convert bauxite to alumina, an intermediate aluminum product,'€ he said, adding that Inalum had always imported alumina from Australia.

Dahlan said Inalum could possibly be one of the shareholders of the Mempawah project so that it could directly access the smelter grade.

The SGA plant, which is expected to cost between $1.4 billion and $1.5 billion, will have an annual production capacity of 1.2 million metric tons of alumina.

Antam has finalized a feasibility study on the project and is expecting to start plant construction by
the end of 2014 or early 2015 at the latest.

The plant'€™s commissioning date is scheduled for 2017. (koi)