JAKARTA – The Indonesian government and a Japanese consortium are unlikely to reach an agreement on the planned nationalization of an aluminum producer following months of tough negotiations over the amount of Japanese shares in the firm, sources said.
The sources said the Japanese shareholders are now considering bringing the case to the International Court of Arbitration if no consensus is reached. The contract of cooperation between Jakarta and the Japanese consortium was due to expire Thursday.
The sources said Wednesday it would be “difficult” to achieve fruitful results with just a day remaining.
If a last-minute agreement can be reached, however, the company will be the first foreign company nationalized by the Indonesian government.
During the negotiations, the Indonesian government made a final offer of $558 million, which is still subject to an audit by public accountants named by both sides, for the value of the Japanese shares in aluminum producer PT Indonesia Asahan Aluminum, or Inalum.
Earlier, Indonesia insisted that the value of the Japanese shares in the nation’s only aluminum producer should be $424 million based on the book value before assets revaluations in 1997 and 1998.
The consortium, Nippon Asahan Aluminum (NAA), claims its shares in the company based in North Sumatra province are worth $626 million, including the value after asset revaluations.
Earlier Wednesday, during a hearing with a budget commission of the Indonesian House of Representatives, Finance Minister Chatib Basri told the lawmakers that the Japanese side is insisting on keeping its shares in Inalum.
“What is obvious is that they are considering an option to bring it to the international arbiter, something that also shows how profitable Inalum is,” Basri said.
Indonesian chief negotiator Agus Tjahajana Wirakusumah told reporters that the Japanese shareholders are continuing their lobbying efforts, including to President Susilo Bambang Yudhoyono, for a contract extension.
The signing on the takeover agreement was earlier expected last week but had to be called because no agreement had been reached.