Inalum considers IPO to help finance expansion projects
Saturday, June 14 2014 - 04:09 AM WIB
Inalum President Director Winardi Sunoto was quoted as saying that the Southeast Asia?s largest aluminum producer would spend about US$1.9 billion over the next few years on power plant, alumina smelter, and expansion of seaport facility to help the company bolster production to 500,000 tons of aluminum ingots by 2019 from the current 250,000-260,000 tons per year.
He said that in addition to internal funds, Inalum will also seek external financing such as bank loans, bonds or through IPO. He added that the IPO would likely take place in 2016 after obtaining approval from the government as the company?s shareholder. Ministry of Industry MS Hidayat said in March that Inalum has been recommended to launch IPO to raise funds to finance expansion programs.
Winardi said that Inalum plans to build a new smelter facility in Mempawah, West Kalimantan, to process bauxite ores into alumina, a raw material for the production of aluminum ingots. The company plans to partner with state-controlled mining firm PT Aneka Tambang Tbk in developing the $1.2 billion smelter, which will have a capacity of 1.2 million tons of alumina per year.
He said that about 30-35 percent of the funding requirement will come from internal funds, while the rest from external financing. Construction of the project is expected to start next year in the hope that it would be completed in 2017 as the firms will require more alumina raw material to boost aluminum ingot production. Inalum has been importing alumina from Australia.
To support the smelter and expansion of production capacity, Inalum is also planning to develop a 600 MW hydro power plant in Asahan, North Sumatra, Kontan and Investor Daily reported, quoting Winardi.
The power plant project, which is currently under feasibility study, will cost about $750 million, about 30-35 percent of the funding to come from company internal funds.
?The construction of the power plant will take up to 40 months, which is very long compared to a smelter or seaport, so it is the priority,? Winardi told reporters after a meeting with Industry Minister MS Hidayat.
Inalum, which was fully acquired by the government from Nippon Asahan Aluminium (NAA), a consortium of 12 Japanese firms, in November of last year when the NAA 30-year contract ended, has gradually increased its production capacity since the takeover. The firm plans to stop exporting its production next year amid rising domestic demand as new downstream facilities are being developed that would need aluminum ingots as raw material. (*)