W

ith the termination of the cooperation agreement, PT Indonesia Asahan Aluminium (Inalum) is now under full ownership by the Indonesian government, despite a move by the firm'€™s Japanese shareholders to appeal to an international dispute settlement body over differences in the valuation of the company'€™s assets.

'€œAs of November 1, all Inalum assets have been returned to the Indonesian government. The company is now a new entity under the management of the State-Owned Enterprises Ministry,'€ Industry Minister MS Hidayat said.

The ownership transfer would allow the government to control all decisions on Inalum'€™s business, including sales of its aluminum ingot production, Hidayat said.

A shareholders'€™ meeting would be held soon and new Indonesian executives would be appointed to fill a number of posts previously occupied by Japanese personnel, he added.

Hidayat did not elaborate upon the government'€™s plan following the acquisition, but the government had earlier said Inalum would be part of its plan to develop an industrial cluster for aluminum-based products in Kuala Tanjung, North Sumatra, where Inalum is located.

Set up in 1976, Inalum was originally 41.12 percent controlled by the Indonesian government and 58.88 percent owned by Nippon Asahan Aluminium (NAA), which comprised 12 Japanese companies, including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd, Mitsui Aluminium Co. Ltd. and the Mitsubishi Corporation.

Launching its operations in 1983, the firm runs the only aluminum smelter in Southeast Asia and sells 60 percent of its total output of 250,000 tons of aluminum ingots to Japan, with the rest sold on the domestic market.

Under a master agreement, the 30-year contract between Indonesia and the consortium was set to expire on Oct. 31, while the takeover will be conducted through an asset transfer.

Intensive talks have taken place over the past few months to determine the value of Inalum'€™s assets that will be used as the basis in determining the price the government has to pay for the Japanese consortium'€™s shares.

After some hard bargaining, both parties finally agreed that the government would pay US$558 million for the consortium'€™s 58.88 percent stake, according to Industry Ministry officials.

The figure is based on the estimated value of Inalum'€™s total assets as calculated by the government'€™s internal audit agency, the Development Finance Comptroller (BPKP).

However, the consortium sent on Thursday a letter to the Indonesian government expressing its intention to appeal to the International Center for Settlement of Investment Disputes over a disagreement allegedly stemming from Indonesia'€™s additional request to have the BPKP'€™s valuation audited by a public accountant to determine the real value of the assets.

Representatives from the consortium could not be reached for comment.

The Industry Ministry'€™s director general, Agus Tjahajana, said the government was prepared to face the Japanese consortium'€™s proposal for third-party settlement, and it was ready to defend its position.

'€œDue to the threat of arbitration, the takeover will now use an asset transfer as its mechanism, as stated in the master agreement,'€ Agus told The Jakarta Post on Friday.