RI will not extend join venture with Japan in Inalum aluminium venture

After political rows in Jakarta and a series of protests in North Sumatra, the government has dropped a plan to continue a joint venture with Japan in operating PT Indonesia Asahan Aluminium (Inalum).

State-Owned Enterprises Minister Mutafa Abubakar told reporters on Tuesday that the government would not renew a master agreement on the joint venture, which should expire on Oct. 31, 2013.

?The plan to end the master agreement is based on a schedule. We will convey the decision to Japan. This is a positive conclusion and we appreciate Japan?s cooperation,? Mustafa said.

Inalum, which was established through an agreement with the Japanese government in 1976, operates an aluminium smelter in Asahan, North Sumatra.

The Indonesian government currently owns a 41.12 percent stake in the company, with the remaining 58.88 percent held by a consortium of 12 Japanese companies including Sumitomo Chemical Co. Ltd., Sumitomo Shoji Kaisha Ltd., Mitsui Aluminium Co. Ltd. and Mitsubishi Corporation.

Industry Minister MS. Hidayat, who was appointed to lead the Japan negotiations, was not aware of the government?s decision. Hidayat said the negotiations with Japan were scheduled for Nov. 5.

In a House of Representatives hearing, executives representing the Japanese consortium said they planned to increase the Inalum factory?s capacity from 250,000 to 317,000 tons per year, with the potential for US$367 million in new investment should the contract extension be approved. (*)