Inalum profits more than triple after govt’s takeover

North Sumatra-based aluminum producer Indonesia Asahan Aluminium (Inalum) reported that it had more than tripled profits since the government took over the company from Japanese companies in April 2014.

President director Winardi Sunoto said the company’s net profits nearly tripled to US$117 million during the April-December period from $34 million in the same period, last year. He attributed the sharp increase in the profits to an improvement in the operation since the change in the management following the government’s takeover.

The growth in net profits, he said, was also supported by the stable water levels at Lake Toba, North Sumatra, which were currently 904.22 meters above sea level. Lake Toba is considered the heart of the company’s operation, from where it sourced water for its power plants.

“With this situation, we could operate 497 muffle furnaces and produce 199,433 metric tons of aluminum bars,” Winardi said during Inalum’s 39th birthday celebration at the JW Marriot Hotel in Medan on Friday, explaining that the production was a 4-percent increase.

In April, last year, the Indonesian government, which owned 41.2 percent, formally signed the takeover of the remaining 58.8 percent of shares from Nippon Asahan Aluminium (NAA), a consortium of 12 Japanese firms, following the expiration of their 30-year contract.

Before the takeover, Inalum, which operated the only aluminum smelter in Southeast Asia, shipped 60 percent of its total output to Japan. The remaining portion was sold to domestic buyers, who also still relied on imports to meet high demand.

On the occasion, Inalum also announced its new logo, uniform and corporate anthem, in a bid to rebrand the company after the government’s acquisition.

He said the change of uniform and anthem was among the most significant steps to rebrand and show the public the company’s image as proudly Indonesian.

“This isn’t a form of short-term euphoria. It’s a move to introduce Inalum’s new identity to the public as well as other parties related to the company,” Winardi said.

Winardi said that Inalum had also helped cope with the power shortage in North Sumatra. According to him the company provided a power supply of about 90 megawatts (MW) to Medan’s power grid after the acquisition.

Residents of North Sumatra have been plagued by rotating blackouts of up to four hours daily, severely disrupting their day-to-day lives. As a result, there are frequent protests against the provincial administration and PLN.

Winardi said that the company is currently in talks with PLN to increase the supply to 135 MW.

Inalum is equipped with hydroelectric plants (PLTA) located along the Asahan River, the only river that channels water from Lake Toba to the Strait of Malacca.

The Sigura-Gura and the ladder-type PLTAs have a power output of 286 MW and 317 MW, respectively, and each is equipped with four turbines.

North Sumatra deputy governor Tengku Erry Nuradi and Samosir regent Mangindar Simbolon were also present during the Friday event.

Tengku stated in his opening speech his appreciation to Inalum for contributing significantly to helping North Sumatra get out of its electricity crisis. He also said that locals were proud to have the country’s aluminum producer operating in the province.

“It [the operation] shows that North Sumatra is a safe location to invest,” Tengku said, urging more foreign investors to invest their money in the area.