Indonesia still suffers shortage of aluminum supply

Indonesia is still suffering from a shortage in aluminum supply as PT Asahan Indonesia Aluminium (Inalum), the only aluminium smelter in Southeast Asia, is only able to produce up to 260,000 tonnes a year while the domestic needs reach 800,000 tonnes, ANTARA news agency quoted an official as saying.

"Out of 260,000 tonnes of aluminum ingot a year produced by PT Inalum, only 40 percent of it goes to the domestic market," the official who is director general of international industrial cooperation of the ministry of industry, Agus Tjahajana, said here on Tuesday.

Based on the master agreement between the Indonesian government and the Japanese consortium, he said, 60 percent of PT Inalum`s production is exported to Japan.

"Indonesia is still short of aluminum supply and therefore is still dependent on imports," he said.

In view of that he said the acquisition of 100 percent shares of PT Inalum, by the government, following the expiration of the cooperation agreement between the Indonesian government and the Japanese consortium in October 2013, would be very crucial.

"By controlling Inalum fully, the government would be able to make a business strategy for the company in North Sumatra including prioritising the domestic needs. Inalum`s full acquisition would make the government able to determine expansion strategy," he said.

Agus said PT Inalum with its present ingot production capacity indeed cannot meet the domestic needs of aluminum ingot.

"Right now Inalum is supplying to 80 local companies in Java. One of the aims of PT Inalum`s expansion plan to increase the production capacity to 410,000 tonnes a year at a cost of US$1.5 billion is to meet the domestic needs," he said.