Foreign investors eyeing Inalum

Indian, Russian and Chinese investors have expressed their interest to acquire the North Sumatra-based aluminum producer PT Indonesia Asahan Aluminium (Inalum) after the contract awarded to Japanese company Nippon Asahan Aluminium to operate the aluminium producer expires in 2013, Republika reported on Wednesday.

The head of the Asahan Authority Effendi Sirait said in Jakarta on Wednesday that the acquisition of Inalum would be part of their plan to develop aluminium and bauxite resources in Indonesia.

These investors had submitted their application to take over Inalum but no response had so been made because the government was considering transferring the management and operation of the company to state mining company PT Aneka Tambang (Antam), he said.

He said that in addition, the Japanese company had also asked the government to extend the contract when the current contract expires in 2013.

The construction of the aluminum plant was part of the economic cooperation initiated by the Indonesian and Japanese governments in 1975. The plant began its operation in 1983 under a 30-year contract. Nippon Asahan Aluminium, a consortium of nine Japanese companies, owns 60 percent stake in the plant, with the government holding remaining 40 percent.

Ansari Bukhari, the Director General of Metal, Machinery and Textile Industries at the Industry Ministry, said in Jakarta on Tuesday that negotiations on the transfer of the Inalum management and operation were currently underway involving the Indonesian and Japanese government officials and Antam executives.

According Ansari, the government preferred to terminate the contract and hand over the plant to Antam because the operation of the aluminum plant under the management of Inalum has been discouraging.

Besides, it is only able to produce 135,000 tons a year or about 60 percent of its installed capacity, its financial performance is also disappointing, he said. The fact that the company exports about 60 percent of its production is also another reason why the government plans to transfer its management and operation to Antam.

?It is not productive for the plant to export its production while at the same time Indonesia still imports,? Ansari said, adding that Indonesia?s aluminum import is almost as large as those exported by Inalum. (*)