State Firms Lining Up to Buy Inalum Outright, Minister Says

State-Owned Enterprises Minister Mustafa Abubakar has said three state-owned companies are interested in buying PT Indonesia Asahan Aluminium — a Japanese majority-owned company that runs Indonesia’s only aluminium smelter.

The government, which owns a 41.1 percent stake in Inalum, is eager to nationalize the company when its operating contract expires in 2013.

Miner PT Aneka Tambang （Antam）, asset management company PT Perusahaan Pengelola Asset and brokerage PT Danareksa Sekuritas are all interested in buying Inalum, Mustafa said. “They are ready to acquire 100 percent ownership,” he said.

Antam is the most advanced in terms of its readiness to acquire Inalum while Danareksa and PPA has only recently expressed interest, Mustafa said.

“With financing help from the SOE Fund, Antam is the most prepared. Meanwhile, Danareksa and PPA have also declared their intentions,” he said.

The SOE Fund is designed to help SOEs with acquisitions, expansion and restructuring.

Mustafa said the companies may also form a consortium to buy Inalum. “I’m giving them 10 days to come up with a proposal,” he said.

Antam’s corporate secretary, Bimo Budi Satriyo, said the company was evaluating how much it would offer for Inalum, while it waited for government approval to move forward.

“The Industry Ministry has established an evaluation and negotiation team for the acquisition and Antam is taking part in that team,” Bimo said.

Tokyo-based Nippon Asahan Aluminium controls 58.9 percent of Inalum, with its holding valued at $726 million, with the Indonesian government owning the rest.

The government began preliminary talks on the future of Inalum with Nippon Asahan Aluminium in May.

Inalum was set up under a build, own and transfer contract, which expires in 2013. The government has presented Inalum with two options — that it would seek 100 percent ownership, or that it would buy a majority stake and NAA could continue to be involved as a minority partner.

There have been growing calls from lawmakers for Inalum, which has not performed well in terms of returns to the government, to be nationalized.

National Mandate Party （PAN） lawmaker Chandra Tirta Wijaya, of House of Representatives’ Commission VII overseeing energy issues, said last week that Indonesia had never received sufficient returns from Japanese companies.

“Japanese corporations use several methods to avoid paying revenue, like reporting losses,” Chandra said. “Only after 2004 did Inalum report a performance improvement.”

After several years of not paying taxes, Inalum finally paid at least $40 million last year, he said.

The SOE Ministry has said Inalum failed to submit financial reports for five years.

“Of course the government must take full control of the company,” Chandra said. “But it must also be made clear what the company’s operations have been all this time.”

Inalum posted a net profit of $121 million for the 2008 fiscal year, the last year for which data is available.