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4 May 2010

Indonesia: State-owned companies ready to manage aluminium firm

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Indonesian government is preparing PT Krakatau Steel and PT Aneka Tambang to become the new management of PT Indonesia Asahan Aluminium (Inalum) after its contract with Japan expires in 2013, state news agency Antara reported, quoting State Enterprises Minister Mustafa Abubakar.

"As a state enterprises minister I hope if it is possible it will be managed by a state-owned company," he said Monday after receiving Japanese ambassador to Indonesia Kojiro Shiojiri.

He said discussions on the management of PT Inalum after 2013 were still going on between the ministry of industry and the Japanese side.

"In principle, I support nationalization of the company so that we could manage it with a new spirit and management," he said.

Japan controls 58.9 percent of shares in PT Inalum through Nippon Asahan Aluminium (NAA) while the Indonesian government 41.1 percent.

The NAA shares are 50 percent controlled by Japan Bank for International Cooperation (JBIC) and 50 percent by a Japanese private party.

PT Inalum`s build, operate and transfer (BOT) contract will expire in 2013 and based upon it three years before the expiration contract could be extended and the NAA has already applied for it through a letter Number SCNA-001 dated September 26, 2009.

The Indonesian government has appointed industry minister MS Hidayat to negotiate with the Japanese side.

Japan has an interest to extend the contract to secure its aluminium supply. Right now 60 percent of aluminium production from Inalum totalling 225,000 tons is exported to Japan.

Mustafa said he could not determine about the government`s shares in Inalum as it still had yet to be discussed at an economic ministerial level meeting.

"I have received the Japanese ambassador who came in essence to express their wish to extend the contract in Inalum," he said.

Mustafa said contract extension was one of the options while there were also other options namely inviting state-owned companies interested to manage Inalum.

"We perhaps like PT Krakatau Steel. I see a good business prospect there," he said. As of 2013 the government will hold 100 percent shares. "It will not become a minority shareholder anymore but a majority shareholder," he said.

To be able to manage Inalum he said it was not impossible for the government to also involve other state-owned companies with liquidity such as PT Jamsostek and PT Danareksa and "so not necessarily mining or manufacturing companies."


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