Indonesia govt expects to buy PT Inalum for $700 million

Indonesia's government is in talks to buy out the Japanese majority owners of aluminium producer PT Inalum for an estimated $700 million, the southeast Asian nation's industry minister said on Tuesday.

The talks over PT Inalum, whose output of aluminium ingots last year fell 0.9 percent from 2010, are part of Indonesia's efforts to generate increased revenue from its abundant natural resources and curb foreign ownership in the sector.

Nippon Asahan Aluminium, a consortium of 12 Japanese firms, holds 58.8 percent of PT Inalum, while the Indonesian state owns the rest. The consortium's 30-year contract is due to expire next year and the government has long since indicated that an extension is unlikely.

"The decision is that the Indonesian government will terminate the contract and will then take over the Japanese NAA consortium's stake in Inalum," Industry Minister Mohamad Hidayat told Reuters.

"We are still discussing with our Japanese counterparts how much we should pay. Our rough calculation is around $700 million," he added.

Once the deal went through, the company could be run as a state-owned enterprise or taken over by a state-owned consortium, or the stake could be sold on the stock exchange, he added.

Earlier this year, PT Toba Sejahtera, an Indonesian energy-focused business group, said it had formed a consortium with nine local governments to buy a 58.88 percent stake in PT Inalum.

The firm said it had a $600 million loan commitment from BNP Paribas and Deutsche Bank to finance the bid, and could double capacity to 500,000 tonnes per year.

State-owned miner PT Aneka Tambang Tbk has also been mooted by government ministers as a candidate to run the aluminium smelter.

PT Inalum's smelter in North Sumatra produced 251,000 tonnes of aluminium ingots last year, compared to 253,271 tonnes in 2010.