Govt to take full control of Inalum

The government plans to take full control of aluminum producer PT Indonesia Asahan Aluminium (Inalum), whose contract ends in 2013, through state-owned mining firm PT Aneka Tambang (Antam), The Jakarta Post reported Friday.

?We need about US$700-800 million for the takeover. Antam will prepare the funds from its internal reserves and domestic borrowings,? State-Owned Enterprises Minister Mustafa Abubakar said at the State Palace on Thursday.

Mustafa said the government wanted a 100 percent control of Inalum, ending a contract signed in 1976 with Nippon Asahan Aluminum Co. Ltd. (NAA), a consortium of 12 Japanese firms, under which Indonesia owned a 41 percent stake, and the rest was owned by NAA.

The Japanese consortium had already formally submitted a proposal for an extension of the contract.

NAA includes Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Nippon Light Metal Company Ltd., C Itoh & Company Ltd., Nissho Iwai KK, Nichimen Corporation, Showa Denko KK, Marubeni Corporation, Mitsubishi Chemical Industries Ltd., Mitsubishi Corporation, Mitsui Aluminum Co. Ltd. and Mitsui & Co. Ltd.

?Our proposal will be finalized in October and brought to the Coordinating Economic Ministry,? he said.

Inalum, located in North Sumatra, produced 254,000 tons of aluminum ingots last year, up 3.4 percent from 245,526 tons in 2008. About 60 percent of Inalum?s output is exported to Japan, with the rest sold to the domestic packaging and transportation industries.

After taking over Inalum, Antam would establish a joint-venture firm, involving local government, Mustafa said. ?The local government will have a share ,? he said.

North Sumatra administration has long been pushing for the ?nationalization of inalum?, citing minimal benefits gained by the province and 10 cities and regencies under it since the company was established 34 years ago.

PT Toba Sejahtera, a business consortium comprising regional governments and former industry and trade minister Luhut Binsar Panjaitan, was ready to acquire the entire 59 percent stake in Inalum, North Sumatra secretary R.E. Nainggolan told The Jakarta Post on Thursday. Nainggolan said Toba would receive financial backing from BNP Paribas. (*)