Inalum output capacity to be doubled

 

With the takeover, the government aims to double the company’s output capacity.

 

The decision to terminate the contract was made in 2010. But, prolonged negotiations over the compensation value for the Japanese investors were only settled in November, in which it was decided that they would receive US$556.7 million.

 

“Inalum is currently the biggest producer in Southeast Asia. After the takeover, we must not worsen [its performance],” Industry Minister MS Hidayat said after a ceremony marking the takeover.

 

The government has allocated Rp 2 trillion from the 2012 state budget and Rp 5 trillion from the 2013 budget to take over Inalum.

 

Inalum, which was established in 1976, was 41.12 percent owned by the government and 58.88 percent owned by the Nippon Asahan Aluminium Co., Ltd. (NAA), a consortium of 12 Japanese investors, including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Nippon Light Metal C. Itoh & Co, Nissho-Iwai Co, Nichimen, Showa Denko, Marubeni, Mitsubishi Chemical industries, Mitsui Aluminium Co. Ltd., Mitsui & Co and Mitsubishi Corporation.

 

Inalum has a production capacity of 225,000 tons per year. Hidayat said the government expected to boost Inalum’s aluminum ingot production to 470,000 tons per year by 2017.

 

“If we look a few decades back, there have been ups and downs since the establishment of Inalum. However, […] the spirit and objectives of this project have been satisfactorily accomplished,” Yoshihiko Okamoto, NAA chairman, said during his speech.

 

He cited that Inalum had produced 6.5 million tons in accumulation. As many as 4 million tons of the total were sold to Japan while the remaining 1.9 million tons were distributed to the Indonesian market.

 

Hidayat further said that talks on whether Inalum would continue to sell its ingots to Japan following the termination of the agreement have not been carried out.

 

“If the price is good, it’s OK. It used to sell products [to Japan] at a special price. For now, our policy will likely be market price,” Hidayat said.

 

Following the signing of the termination agreement, the signing of the share deeds will take place at the State Owned Enterprises (SOE) Ministry’s office on Dec. 19.

 

Following the signing of the share deeds, Inalum will be officially 100 percent owned by the country.

 

SOE Minister Dahlan Iskan, who also attended the termination agreement signing ceremony, remained tight-lipped in regards to changes to the board of directors at Inalum.

 

Dahlan said the takeover of Inalum had already provided concrete results prior to the signing of the termination agreement.

 

“Since last week, it has helped handle the electricity demand in North Sumatra by supplying 105 megawatts. As we will increase the company’s capacity, we will need to establish more power plants,” he said.

 

Inalum also owns hydro power plant PLTA Asahan II, which has an installed capacity of 604 megawatts.