PT INALUM REGISTERS BETTER PERFORMANCE IN THE HANDS OF INDONESIANS

by Andi Abdussalam

Jakarta, June 3 (Antara) - Aluminum manufacturer PT Indonesia Asahan Aluminium (Inalum) in Asahan, North Sumatra, has been registering better performance than it did when it was operated by a Japanese joint venture firm.          It had been operated by Japan, as the majority shareholder, since 1976 through Nippon Asahan Aluminium (NAA) with 12 private Japanese firms as part of the joint venture.          The Indonesian government took over Inalum after its contract with the Japanese side expired on October 31, 2013.          Hj Meilizar Latif, a member of North Sumatra's Legislative Assembly (DPRD), said in 2012, that Inalum, with an annual production capacity of 230 thousand-240 thousand tons, reported a profit of US$12 million in 2010, while its debt burden reached US$70 million.          After it was taken over by Indonesia, the company seems to have increased its production. During the April-December 2014 period, it was able to double its profits as compared to the corresponding period in the previous fiscal year.          "The company booked a net profit of US$128.7 million, up significantly by 201 percent from US$64 million in the fiscal year 2013," Winardi, the president director of PT Inalum, noted in a written statement on Monday, last week.

SOE MINISTRY TO TAKE OVER INALUM FROM JAPAN

By Andi Abdussalam

Jakarta, Oct 23 (Antara) - The House of Representatives agreed on Tuesday to hand over PT Inalum's management to the State-Owned Enterprises (SOE) Ministry following the government's decision to acquire it after three years of negotiations with the Japanese government.          The House made the decision in its joint meeting with all parties, as the government decided not to extend the expired contract of PT Inalum, an aluminum joint venture between Indonesia and Japan in which Indonesia held 41.13 percent of the company's shares and Japan owned 58.87 percent.          "House Commission VI and the government agree to hand over the management of Inalum to the State-Owned Enterprises Ministry based on the law," Commission VI Chairman Airlangga Hartarto said when reading a statement at the conclusion of the joint meeting with Industry Minister MS Hidayat and SOE Minister Dahlan Iskan, at the Parliament building here on Tuesday night.          The meeting was also attended by Head of the Government Development and Finance Comptroller (BPKP) Mardiasmo and North Sumatra Governor Gatot Pujo Nogroho.          The House agreed to the results of negotiations carried out by The Asahan Project Negotiation Team, formed by the President in 2010.          "We hope the takeover process will be smooth so that the government will own 100 percent of PT Inalum's stake beginning November 1, 2013," Hartarto said, referring to the contract of the joint venture firm, which will expire on October 31, 2013.

DOMESTIC FIRMS READY TO TAKE OVER INALUM

By Andi Abdussalam

Jakarta, Aug 3 (ANTARA) - The Indonesian government is still negotiating the takeover of PT Indonesia Asahan Aluminium (Inalum), an Indonesia-Japan joint venture whose contract will expire in 2013 after more than 30 years of operation in Asahan, North Sumatra.          Finance Minister Agus Martowardojo stated here on Friday that the ownership of Inalum should return to the government after the expiry of the contract in October next year.          "Japan's Nippon Asahan Aluminium should no longer extend the cooperation contract. Moreover, Indonesia has suffered losses for about 22 years during the cooperation," he said.          Although the finance ministry wished that Inalum be returned to the state, the government was still negotiating and considering various aspects, Agus added.          "The finance ministry's recommendation is clear: the government must acquire it, because that will be in Indonesia's interest. However, the government has not decided yet and discussions are ongoing," he explained.          In the meantime, the State-owned Enterprise Ministry (SOE) also expressed interest to acquire Inalum.          SOE Minister Dahlan Iskan said the companies under his ministry's management were ready to take over Inalum if the government wanted them to do so.  "I am waiting for a decision by the government regarding Inalum. If we are asked, I am ready to take it over," Dahlan said.          He stated that PT Aneka Tambang, a publicly listed state firm under the SOE ministry, was interested in taking over Inalum.     Noppon Asahan Aluminium holds a 58.9 percent stake in Inalum.          According to Industry Minister MS Hidayat, the government has prepared a budget of Rp7 trillion to take over tin producer PT Inalum in 2013.       "Indonesia is seeking to hold 100 percent shares of the company by buying the rest of the 59 percent shares," he said.          "The government is still negotiating unofficially in order to finalise a purchase agreement. It is also discussing legal issues and the fate of workers. Official negotiation will start in August or September this year," Hidayat explained.          "According to the master agreement, if we decide to take over, the negotiations must be finished a year before the deadline," he noted.          Therefore, Hidayat added, the negotiations and payment for Inalum shares must be finished by the end of October because the deadline was October 2013.          Indonesia owns 41.13 percent of Inalum's stake, while the remaining 58.87 percent belong to Nippon Asahan Aluminum (NAA). Half of the NAA shares are owned by the Japan Bank for International Cooperation (JBIC), which represents the Japanese government, and the other half belongs to 12 other Japanese firms.          The Indonesia-Japan joint venture project began operating on January 6, 1976, based on an agreement signed on July 7, 1975. The contract will expire in 2013.          Inalum has a production capacity of 230,000-240,000 tonnes per annum and it booked a profit of US$12 million in 2010.       Based on the assessment of three audit agencies, Inalum is valued at around US$650 million, with NAA¿s majority stake worth around US$550 million.          If acquired in 2013, a number of assets (such as power plants with a capacity of 604 megawatts) will automatically come under Indonesia's possession.          "We are ready to pay compensation in accordance with the 2013 booking value. We need to pay attention to the booking value in order to know its works. The values should not be inflated. In this case, it should be assessed by an independent party," Chief Economic Minister Hatta Rajasa said last year.       Based on an estimate, the government has to pay around US$650 million in compensation to NAA for the Japanese company¿s investments in the smelter and power plants.       "After taking over Inalum, the government may ask a state-owned company to manage Inalum but so far no decision has been made," Hidayat said.          The government will soon negotiate with NAA on the Inalum takeover. "According to the plan, we will hold an official meeting in August or September. Both sides will sign a document ending the cooperation in October," said Hidayat, the chief of the team in charge of negotiating PT Inalum's cooperation contract, on Friday.          "After the document is signed there will be a transitional period of one year before the takeover. There are crucial issues on which we must negotiate. We still have time to complete the audit process and get a second opinion from a consultant and other parties. What is important is that the government is determined to buy 100 percent of Inalum shares," he added.          In the meantime, lawmaker Irmadi Lubis, from PDIP, hailed the government's takeover efforts. "We hope that the North Sumatra governor will not be left behind in the process of takeover," Irmadi said in response to the government's request for additional funds to finance the takeover. He added that the takeover would help the revival of North Sumatra's economy.          North Sumatra local legislator Meilizar Latif said last year that Indonesia should be able to manage Inalum without the involvement of foreign companies. "Indonesia must be able to manage it and Inalum should not fall in the hands of foreigners after 2013," she added.          Almost all of the 2,600 workers at Inalum are Indonesians.       "Indonesians are handling most of the activities of Inalum. Of the 270 Japanese workers at the beginning of the operations, only two are not yet replaced by Indonesians. The two are in the top management positions," she said.          Domestic companies are also vying for Inalum. According to Dahlan, many companies have expressed interest in buying PT Indonesia Asahan Alumunium (Inalum) shares.          "The companies include Japanese and Indian companies, as well as state and private national firms," he said after chairing a meeting between the State Enterprises Ministry and the board of directors of PT Telekomunikasi Indonesia at the Telkom building in Jakarta.       "Because of the tight competition among bidders for Inalum shares, Indonesian state firms must prepare themselves, particularly with regard to funds," Dahlan said.          "We will likely take over Inalum. We have sufficient funds," Dahlan added. ***2*** (T.A014/INE/B003) 03-08-2012 20:08

LOCAL GOVT WANTS TO HAVE SHARES WITH INALUM

By Andi Abdussalam

Jakarta, July 17 (ANTARA) - The North Sumatra administration is seeking a share-ownership with PT Indonesia Asahan Aluminium (Inalum), an Indonesia-Japan joint venture whose contract will expire in 2013 after operating in Asahan, North Sumatra, for 30 years.          The Sumatra administration's interest in the shares with Inalum comes up to the surface amid indications that the central government will take over the Japanese stake in PT Inalum.          While Japan is still offering a cooperation to continue the joint-venture, the central government has expressed its plans to acquire it in 2013 through the Government Investment Center (PIP).          Now, Indonesian owns 41.13 percent of Inalum's stake while the remaining 58.87 percent belong to Nippon Asahan Aluminum (NAA). Fifty percent of NAA shares are owned by the Japan Bank for International Cooperation (JBIC) which represents the Japanese government and 50 percent others belong to 12 other Japanese firms.          The project began operating on January 6, 1976 based on a master of agreement signed on July 7, 1975 and would expire in 2013.          Minister of State Enterprises (BUMN) Mustafa Abubakar has sent a letter to the Asahan Authority on October 29, 2010, expressing the intention of the government to take over the Japanese shares with Inalum as of October 31, 2013.          As regard, the local government is also seeking for stake ownership.          In order to have stake with Inalum, the North Sumatra province will set up a desk in charge of discussing the portion of stake it could have with Inalum when it is taken over by the central government.          The plan to set up the desk was formulated in a coordination meeting last week with the North provincial Sumatran government, the Inalum Special Committee of North Sumatra's Regional Legislative Assembly (DPRD) and representatives of ten district governments which overseas the operating areas of Inalum.          Chairman of the Inalum Special Committee Bustomi HS said North Sumatra was happy with the issuance of a Home Affairs decree on March 31, 2011 on the formation of a Working Group to end the Master Agreement on the Asahan Project.          He said that it was regulated in the minister's decree that the North Sumatran provincial government and the local governments of ten districts in the Inalum operating areas could obtain stake ownership after Inalum had been taken over by the central government.          Therefore, North Sumatra needs to set up an Inalum Desk charged with the task of calculating the reasonable portion of stake for North Sumatra. "The Desk will represent North Sumatra in having dialog with the central government," Bustami said.          Head of Regional Development Planning Board of North Sumatra Riyadil Akhir Lubis said the central government had set up a team and sub-technical team to discuss the management of Inalum after its takeover in 2013.          Therefore, his side hoped that the district governments should appoint their representatives immediately to the Inalum Desk. "They need to be appointed and sent immediately so that they would be able to follow the agenda discussed by the central government," Riyadil said.          Deputy Head of Toba Samosir District Liberty Pasaribu said that personnel of the desk must have comprehensive understanding of the share pattern that the government would make.          In the meantime, Hj Meilizar Latif, another member of the North Sumatra DPRD, said that Indonesia would be able to manage Inalum, even if without the involvement of foreigners.          "Indonesia must be able to manage it. Therefore, Inalum should not fall in the hands of foreigners after 2013," Meilizar Latif said. After all, almost all workers at Inalum are Indonesians. There are about 2,600 workers with PT Inalum. They are best Indonesian workers.          "The Indonesian sons are handling most of the activities of Inalum. Of the 270 Japanese workers at the beginning of the operations, only two are not yet replaced by Indonesians now. The two are in the top management positions," she said.          Now, Inalum has a production capacity of 230,000 - 240,000 tons per annum     She regretted if the government offered an open tender option on the management of Inalum after the completion of its contract in 2013 because all Indonesian sons in the company were already capable. "An open tender will enable the entry of foreigners again," she said.          PT Inalum booked a profit of US$12 million in 2010 while its debt burden amounted to US$70 million. This will disadvantage Indonesia if the company is put on tender, she said.          She said that instead of calling tender for it, it would be better to continue the joint-venture scheme with Japan.          Japan in the meantime is still offering its cooperation and expresses interest to resume the joint venture business with Indonesia.           According to Ambassador Yoshinori Katori, Japan hopes its cooperation with Indonesia in PT Inalum will continue following the expiry of its contract in the company in 2013.          "We still have a lot of time to discuss it before the expiration date comes. We will continue discussing the continuation of the project. What I can assure is that the project is very important for both countries," he said before academic community of  Universitas Sumatra Utara (USU)  in Medan last week.          But there are now strong indications that the government would take it over after the contract expires in 2013.          "If asked whether we have plans to buy shares such as those of Newmont, we will say yes and the most immediate one is likely PT Inalum whose contract will expire in 2013," PIP Head Soritaon Siregar said over the weekend.          The PIP head said that after the acquisition the government would call a tender for the firm which would be open for local bidders.           "After the acquisition, if there are interested local companies, we will call a tender for it. But we will acquire its entire stake in the first place in 2013," he said.***5*** (T.A014/A/H-NG/a014) 17-07-2011 18

RI, JAPAN TO NEGOTIATE INALUM THIS MONTH

By Andi Abdussalam

Jakarta, Nov 9 (ANTARA) -  Indonesia and Japan will this month start negotiating the future of  PT Indonesia Asahan Aluminium (Inalum), an Indonesia-Japan joint venture the contract on which  will expire in 2013 after operating for about 30 years in Asahan, North Sumatra.          The Indonesian delegation to the negotiations would be led by Industry Minister Mohammad S Hidayat. Initially scheduled to be started on November 5, 2010, the talks were expected to be held in the middle of this month, after the Asia-Pacific Economic Cooperation (APEC) meeting in Japan on November 7 - 14, 2010.          "The exact schedule will be made after I return from attending the APEC meeting," the industry minister said.          The initial meeting scheduled for November 5 was canceled because the president had not yet issued a decision on the formation of Indonesia's negotiation team.          "Now, the presidential decision has been issued and I have been assigned to chair the team," Minister Hidayat said.           The minister said earlier that the government would do its best to serve and defend the  national interest in the negotiations with Japan.          With an annual production capacity of 230,000 - 240,000 tons, Inalum which is  58.87 percent  owned by Japan and 41.13 percent by the Indonesian government, will see  its contract expire in 2013.           Up to now, Japan with 12 private Japanese firms in the joint venture is the majority shareholder through Nippon Asahan Aluminium (NAA). A total of 50 percent of NAA shares are controlled by  the Japan Bank for International Cooperation (JBIC) while the remaining 50 percent are owned by Japanese private firms such as Sumitomo Chemical Company Ltd, Sumitomo Shoi Kaisha Ltd, and Nippon Light Metal Co Ltd.          As the cooperation project will expire in 2013, Indonesia and Japan will renegotiate the future of the aluminum producer firm. Japanese investors have submitted a proposal which in essence asked that the contract be extended for another 30 years beginning in 2013, with the same share composition.          However some quarters have called on the Indonesian government not to extend the contract of Inalum with the Japanese side.          The rejection was among others raised by legislators Satya W Yudha and Dito Ganinduto of the House of Representatives (DPR)'s Commision VII on energy affairs. Rejection also came from Executive Director of Indonesia Resources Studies (Ires), Marwan Batubara.          Satya W Yudha said Japan had bad records in Inalum management in the past 30 years. He said that the presence of Inalum did not benefit the government and the local people. "The Indonesian government must be firm in taking over the Inalum management and terminate the contract with Japan," he said.          His colleague Gito Ganinduto said Indonesia had state-owned firms (BUMN),  technological capability, human resources, funding, raw materials and markets so that it was ready to take over Inalum.          Executive Director of the Institute for Development of Economics and Finance (Indef) Ahmad Ernai Yustika said that the government should own 100 percent stake of Inalum and should not give a chance to Japan to extend the contract.          "The government should fight for the interest of the nation so that Inalum would be manage by our own ," he said.           Therefore, he said, there is no need for the government to follow the audit results of Ernst & Young over Inalum. Ernst & Young (E&Y) last was conducting an auditing over the financial performance of PT Inalum. The results of the auditing are expected to serve as a reference for the government to take a decision.           The same voice was also aired by Executive Director of the Indonesian Resources Studies (Ires), Marwan Batubara. He said that the audit of E&Y should only serve as a reference for the government to know the amount of compensation it could spend after the contract with Japan was terminated.          He asked E&Y to conduct the audit professionally and transparently. "It may not take side with either side of the two," Marwan who is a former member of the Regional Representatives Council (DPD) said.          Earlier Minister of Industry MS Hidayat said the results of E&Y auditing would be used by the government as a reference when it held a negotiation with Japan.          Dito added that it was now time for Indonesia to manage Inalum itself and discontinue the Inalum  contract with Japan. Japan has enjoyed the benefit in the management of Inalum for about 30 years.          In the meantime, Minister of State Enterprises (BUMN) Mustafa Abubakar has sent a letter to the Asahan Authority on October 29, 2010, which informed that Indonesia would take over Japanese shares with Inalum as of October 31, 2013.          A consortium of BUMNs consisting of state-owned power utility PLN, tin mining PT Aneka Tambang, Asset Management Firm (PPA) and PT Danareksa will be involved in the share takeover.          Earlier, Chief Economic Minister Hatta Rajasa said that the government had prepared two options in the face of negotiations with Japan over the Inalum future.          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," he said.***2*** (T.A014/A/HAJM/A/S012) 09-11-2010 00:19

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