Local bauxite miners eye 25 percent stake in Inalum

At least 80 local bauxite producers grouped in the association of Indonesian mineral companies (Apemindo) have expressed their interest to acquire a 25 percent stake in PT Indonesia Asahan Alumninium (Inalum), Kontan reported on Thursday.

Ladjiman Damanik, the association?s chairman, said on Wednesday that the local bauxite miners had agreed to provide at least Rp 5 trillion for the acquisition of the 25 percent stake and to partly finance for the expansion of the company?s smelting facilities.

He said that the government should form a synergy and cooperate with state owned and private companies to take over Inalum after its contract to operate the smelting plant in Asahan, North Sumatra expired in 2013.

?Inalum has the potential to absorb the bauxite ores from local bauxite production which is at present mostly exported,? he said.

The Indonesian government has formally rejected Japan?s request to continue to operate aluminum producer Inalum after its existing agreement expires in 2013, a senior Indonesian official has said.

Inalum, which was established in 1976, is 41.12 percent owned by the Indonesian government and 58.88 percent owned by NAA, a consortium of 12 Japanese companies, including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Mitsui Aluminium Co. Ltd. and Mitsubishi Corporation.

The Japanese consortium reportedly asked for its contract to be extended, committing to increase Inalum?s annual aluminum ingot production capacity to 317,000 tons, up from a current 250,000 tons. The Japanese offered to invest US$367 million in return for the contract extension.

To complete the takeover, the government set aside Rp 2 trillion (US$207.68 million) from the 2012 state budget surplus and Rp 5 trillion from the 2013 state budget.

Ladjiman said that at least US$1.2 billion (about Rp 12 trillion) would be needed for the acquisition of the Japanese consortium?s shares and for the expansion of the existing smelting facilities.

He said that, as the expansion of the existing production capacity would require a larger amount of funds, the government should cooperate with local state and private companies in the acquisition and operation of the smelting plant. (*)