Govt will offer two options for Japanese consortium over Inalum fate
Friday, June 11 2010 - 03:52 AM WIB
Coordinating Minister for the Economy Hatta Rajasa said in Jakarta on Thursday that in the first option, the government would not extend the contract awarded to the company to operate an aluminum smelting plant and two hydropower plants in North Sumatra.
In the second option, Hatta said, that the government would extend the contract, but with a revision especially related to the government?s ownership in Inalum. ?The Japanese companies should also pledge to increase the production capacity of the existing smelting plant and power plants if it wants its contract to be extended,? he added.
Hatta said that if the government finally took the first option, it would be ready to pay a compensation of about US$220 million to the Japanese consortium, and name one of state companies to take over the joint venture company. The government will likely name state mining company PT Aneka Tambang (Antam) to take over the smelting plant.
The construction of the aluminum smelting 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 (NAA), a consortium of nine Japanese companies, owns 58.88 percent stake in the plant, with the government holding remaining 41.12 percent. The government should decide whether or not it would extend the contract three years before the contract ends in 2013.
Earlier reports said that the government might prefer 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. 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.
Last month, Chairman of Asahan Authority Effendi Sirait said that Inalum has submitted officially an application for the extension of contract of cooperation in the management of aluminium smelter in Asahan, North Sumatra.
In the proposal, the NAA offers additional investment amounting to US$367 million to increase the production capacity of aluminium smelting plant from 250,000 tons to 317,000 tons per annum. (*)