JAKARTA – The Indonesian government has moved closer to reaching a price to buy an aluminum producer from a Japanese consortium following months of tough negotiations over the value of the company’s total assets, according to an Indonesian Cabinet minister.
Industry Minister Mohamad Suleman Hidayat told reporters the Indonesian government has made its last offer for the total assets of aluminum producer PT Indonesia Asahan Aluminium (Inalum) based on calculations by the Finance Ministry and the state auditor.
The offer should be no more $558 million, Hidayat said Monday.
Earlier, Indonesia insisted that the value of the nation’s only aluminum producer should be $424 million based on the book value before asset revaluations in 1997 and 1998.
Japanese consortium Nippon Asahan Aluminum, or NAA, claims that the North Sumatra Province-based company is worth $626 million, including the value after asset revaluations.
The Japanese shareholders had even threatened to bring the case to the international arbitration court if no consensus was reached over the value.
Asked about the consortium’s response to the offer, the minister said, “Principally, they can accept that, because it was an option they had once proposed.”
Agus Cahayana, director general for international industry cooperation at the Ministry of Industry, earlier said the consortium had proposed the amount 11 months ago, but the figure had never been touched before during previous negotiations.
“Negotiations (on the figure) have just started. We will report this to the Parliament tomorrow (Tuesday),” Hidayat said.
If the legislature gives its approval, an agreement is expected to be signed by both sides in Jakarta on Friday and the money will be transferred to NAA’s account on Nov. 1 at the latest, as demanded by the consortium.
Created in 1976, Inalum is 41.12 percent owned by the Indonesian government and 58.88 percent held by NAA, a consortium of 12 Japanese companies, including Sumitomo Chemical Co., Sumitomo Shoji Kaisha Ltd., Mitsui Aluminium Co. and Mitsubishi Corp.
The consortium earlier asked for its contract, which will expire Oct. 31, to be extended. It was committed to increasing the company’s annual aluminum ingot production capacity to 317,000 tons. The current level is 250,000 tons, with 60 percent being exported to Japan and the rest sold on the domestic market.
The consortium offered to invest $367 million in return for the contract extension.
Inalum, which began operations in 1983, currently operates the only aluminum smelter in Southeast Asia, in North Sumatra’s Asahan Regency.
It utilizes two hydropower plants in the regency as its prime energy sources, keeping its production costs low compared with similar smelters utilizing other energy resources.