Govt, NAA agree on Inalum takeover

JAKARTA. The Indonesian government and Japanese consortium Nippon Asahan Aluminium (NAA) have agreed that the takeover of Indonesia Asahan Aluminium (Inalum) will be made through a transfer of shares, instead of transferring assets as stipulated in the contract between the two parties.

“We’ve also agreed to carry out the transaction on Nov. 1 this year,” Agus Tjahajana, the deputy chief negotiator for the takeover, said on Tuesday after a meeting on the planned acquisition in Jakarta.

The 30-year-contract between Indonesia and the consortium will expire at the end of October, and the government has been firm in its plan to acquire its full stake amid its campaign to spur growth in the downstream industry. Industry Minister MS Hidayat has said that North Sumatra, where Inalum is located, can be developed into an industrial cluster for aluminium-based products.

Established in 1976, Inalum is 41.12 percent owned by the Indonesian government and 58.88 percent by the consortium of 12 Japanese firms comprising, among others, Mitsui Aluminium Co. Ltd., Mitsubishi Corporation, Sumitomo Chemical Co. Ltd. and Sumitomo Shoji Kaisha Ltd.

Inalum, which has run the only aluminum smelter in Southeast Asia since 1983, annually produces 250,000 tons of aluminum ingots, of which 60 percent is exported to Japan, with the remainder sold in the domestic market.

Agus said that the government would continue intensive talks with NAA as disagreement still persisted on a few issues. “One of the crucial issues is about the calculation of the book value. We are seeking the way out of this problem,” he said, adding that both parties still maintained different views on the methods of calculating the book value.

Based on the Finance Ministry’s estimate, the book value of the firm was US$1.23 billion last year and on this assumption the stake to be acquired by the government amounts to $723 million.

Both parties would wait for the tax audits of the firm’s annual financial report for the fiscal year  ending in March 31, Agus said. Further talks would also focus on resolving past liabilities and transfers of property, including power generators.

The smelter operated by Inalum sources power from hydropower plants Asahan I and Asahan II in North Sumatra, which keeps its production costs relatively low compared to similar smelters utilizing other energy sources.

The NAA consortium has repeatedly requested an extension of the contract, promising to raise Inalum’s production capacity to 317,000 tons and offering $367 million to seal the deal. Other foreign companies, as well as local firms including Aneka Tambang (Antam) and Toba Bara Sejahtera, have expressed their interest in taking stakes in Inalum. (Linda Yulisman/ The Jakarta Post)