GOVT PLANNING TO ACQUIRE ALUMINUM JOINT VENTURE INALUM

By Andi Abdussalam

Jakarta, June 10 (ANTARA) -  The government is planning to acquire PT Indonesia Asahan Aluminium (Inalum), a joint venture  between Indonesia and Japan  producing aluminum in Asahan, North Sumatra, with an equity ownership ratio of 41 : 59.          State Enterprises (BUMN) Minister Mustafa Abubakar said  Indonesia had the financial capability to  take over Inalum. "We are able to take it over, whatever the price. We have already made the relevant calculations," the minister said after attending a coordination meeting on PT Inalum on Thursday.          He said a state-owned company would be assigned to acquire the Japanese stake in Inalum but he could not yet name the  state enterprise.  So far, state-owned mining firm PT Antam had been active in technical discussions on  the Inalum take-over plan.          The minister did not rule out the possibility that  other state mining companies would  offer themselves, saying his ministry was now drawing up a proposal on how and by which state firm Inalum would be taken over.          "The state enterprises ministry in its capacity as the holder of the government's shares in Inalum wants  the venture to be continued by Indonesia. We will propose that this project be given to a state firm," Mustafa Abubakar said.          The minister said that his side was making preparations on the proposal that would be taken to the Asahan authorities. The proposal contained a request that all  Inalum shares  be handed to the government.           On the possibility that a number of state firms could join in the management of Inalum, the minister said that what was important was preparations in the face of negotiations so that Inalum would fully be owned by the government.          "The problem of whether Inalum is  later  managed by two or three state firms is only a small thing," Minister Abubakar said.          "In essence, the proposal emphasizes the need for Inalum to have the position which benefits the interest of the nation. We will fight for that first," he said. He did not explain when the proposal would be completed, but he indicated that its drafting should not exceed the deadline of October 31, 2010.          "It will not take us that long to finish the proposal on the taking over of the aluminum project,"  Abubakar said.          He said that after it was taken over, Inalum's production would be designed to meet domestic demand. "The remainder will be exported but the volume designed for exports has not yet been decided,' he added.           The planned take-over of the Asahan-Inalum project would enable Indonesia to export aluminum at the going world market price. "We will leave it to  market conditions. Let's just see later on," Abubalar said  on the possibility of higher export prices if Inalum is acquired by the government.          However, it seems that priority would be given to domestic demand. "We will give priority to meeting domestic demand first and then the  remainder can be exported. The export destination could be  Japan," the minister said but admitted that he could not yet provide details on the percentages for the domestic market and for export.          "This will run on a  corporate basis. There will be demand from the domestic and international markets," the minister added.           He said that his ministry would not let itself be trapped in  calculations of  how much could be marketed at home and how much abroad. "We will not say that how many percent will be for this and the remainder for that. What will happen if we say that 70 percent are for the domestic market but demand turns out to be less than 50 percent. That would create a problem. So it is  better not to mention figures in the first place. The mechanism should  be left to the market," the minister.          In the meantime,  Chief Economic Minister Hatta Rajasa said that the government had two options regarding the continuation of the Inalum project in Asahan.          "The first option is that the project would be managed by state-owned firms (BUMN). This means that cooperation contract with Japan would no longer be extended," the minister said.          The second option is that the government and Japan would continue their cooperation but with options that benefit Indonesia. "For instance, the Indonesian government should be the majority share holder. Its production capacity and generators should be increased," he said.          Up to now, Japan with 12 private Japanese firms in the joint venture is the majority share holder, namely 59 percent while Indonesia only owns 41 percent. "If we choose the cooperation option we should be the majority share holder," the chief economic minister said.          According to Hatta, Japan and the government should have submitted a proposal to the Asahan authority. The proposal should be prepared by their respective technical teams. The government itself would continue to sharpen the technical assessment proposal by the establishment of an independent team to assess the value of the whole assets.          In 2013, the number of assets such as power plants with a capacity of 604 megawatts will automatically become Indonesia's possession. "We are ready to pay compensation in accordance with the 2013 booking value. We need to give attention to the booking value to know its values. It should not happen that the values are too high and in this case it should be assessed based on independent judgment," Hatta Rajasa said.          The government wants that the Asahan area would become a special economic zone in the future and for this it has to increase its production capacity, power generators and others.          "The production capacity and the number of power generators need to be increased. New investment is also needed because we have the desire to turn the area into a special economic zone," the minister said.***2*** (T.A014/A/HAJM/22:00/a014) 10-06-2010 22:05:0