Inalum takeover to be finalised in October

Indonesia has bitten the bullet and announced that it has bought Nippon Asahan Aluminium’s majority shareholding in Indonesia Asahan Aluminium. The deal will be finalised later in the year.

The plan is to take over Nippon’s 58.88% stake in the business when the contract ends in October 2013. Currently, the Indonesian government holds 41.12% of shares in the company.

Indonesia is looking to boost its downstream industry and hopes that it can double Inalum’s output to 500kt of aluminium ingot per annum. Currently, 60% of the smelter’s output (250kt) is exported to Japan.

The Inalum smelter is located in Kuala Tanjung in the Batubara Regency area of North Sumatra. Indonesia’s industry minister, MS Hidayat, hopes to transform the area into an industrial cluster for aluminium-based products.

The development of Kuala Tanjung will be in three phases, completing in 2025 and embracing aluminium, agro-based and maritime industries. The site would be supported by infrastructural development, such as roads, a power network and other necessary utilities.

The Kuala Tanjung area is being primed for the development of aluminium alloys, sheets, foil and finished products, including automotive components and cables. There are also plans for upstream operations, such as an alumina refinery and calcined petroleum coke (CPC) factories.

While Indonesia is a well-known source of bauxite, Inalum sources 500kt of alumina from Australia as it lacks a refinery in which to process bauxite into alumina. Once the Ketapang refinery in West Kalimantan is built, however, the company will be able to buy local bauxite to feed its new 2Mt/yer refinery.

In 2015, an alumina refinery built by PT Well Harvest Winning and costing US$1 billion, will be ready in 2015. The refinery is a joint venture between aluminium producer China Hongqiao Group and Pt Cita Mineral Investindo Tbk.

Plans are also afoot to build a Calcined Petroleum Coke (CPC) plant within Inalum’s factory boundary to product 100kt of CPC, 90% of which would be sold to the aluminium smelter.

Other plans include the possibility of reviving an idle aluminium alloy plant in Kuala Tanjung.