Aluminum Smelter Likely to Go Into Indonesian Hands When Partnership With Japan Expires

The government is likely to take full control of PT Indonesia Asahan Aluminium, the nation’s only aluminum smelter, when its partnership with the Japanese government ends in 2013, the state-owned enterprise minister said on Monday.

Mustafa Abubakar said the government had begun initial talks with the Japanese government about the fate of the company, also known as Inalum.

“Principally, we want our SOEs to control and operate Inalum, but the Japanese ambassador, Kojiro Shiojiri, proposed extending the contract by injecting more funds into the company,” he said.

He said the talks were in the preliminary stage and the amount of potential investment had not been discussed.

Mustafa said the company had potential and he would invite other state-owned enterprises to take a stake.

“I see a good business opportunity in Inalum, and when the contract expires in 2013, the government will step in to be the majority shareholder,” he said.

Based in Kuala Tanjung, North Sumatra, Inalum is 58.9 percent held by Tokyo-based Nippon Asahan Aluminium. The rest is owned by the Indonesian government.

But with NAA’s contract set to expired in 2013, the House of Representatives has demanded the company be nationalized because it was a build, own, transfer (BOT) contract.

Daryatmo Mardiyanto, a member of the House’s Commission VII, which oversees energy issues, on Monday said Indonesia should take control when the contract expired. “We’ve been waiting for 34 years [Inalum was established in 1976]. Now it’s our turn to show that we can,” he said.

The government should remain committed to the contract until it expired but then exercise its option to take control, he said.

Mustafa said state-owned enterprises specializing in manufacturing, such steel company PT Krakatau Steel, were good potential candidates to represent the government in Inalum.

The ministry uses state brokerage PT Danareksa to manage its minority shares, worth Rp 4.7 trillion ($521.7), in nine companies.

As much as 60 percent of Inalum’s production of 225,000 tons is exported to Japan. The rest is sold domestically.

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