Govt mulls international arbitration to settle price dispute over Inalum acquisition

By Bambang Atmaja

Minister of Industry MS Hidayat said that the government is considering to go to international arbitration or an independent third party to settle lingering price dispute over the planned acquisition of PT Indonesia Asahan Aluminum (Inalum) from Japanese consortium Nippon Asahan Aluminum when the latter?s 30-year contract to manage the aluminum smelting firm expires in October.

?If the disagreement over the (acquisition) price could not be settled, we?ll ask (the consortium) to go to international arbitration. Let a third party settles it. Or both of us (government and the consortium) appoint an independent organization to settle,? he said on Wednesday.

Coordinating Minister for the Economy Hatta Rajasa said previously that the government had decided to take over full control of Inalum after Nippon Asahan?s existing contract expires. He said that the government has allocated over Rp 7 trillion (some US$751.8 million) funds in the state budget to finance the acquisition. The minister said that after the take over, PT Inalum would become a state-owned firm.

Inalum was set up in 1976 through an agreement between the government and its Japanese counterpart. The company runs the only aluminum smelter in Southeast Asia, in Asahan, North Sumatra, and utilizes hydropower plants Asahan I and Asahan II as its prime energy source.

Editing by Reiner Simanjuntak