Indonesian state enterprise ready to buy stakes of an aluminium smelter sold by its Japanese owner

An Indonesian state enterprise is ready and willing to buy a 59 percent stake in an aluminium smelter that the current Japanese owner is being forced to sell under foreign investment laws, a government minister said on Friday.

Nippon Asahan currently holds the stake in Indonesia Asahan Aluminium (Inalum), and the government, which owns the remainder of the smelter, has resisted attempts by the Japanese company to maintain its stake beyond next year.

State Enterprise Minister Dahlan Iskan on Friday said state-controlled gold and nickel producer Aneka Tambang was well-placed to make the acquisition.

“I am waiting for the final instruction from the government. We are ready to buy the stake,” Dahlan told reporters at the Jakarta office of Hatta Rajasa, the coordinating minister for the economy.

“If we are asked to buy, then we will buy, at whatever price,” Dahlan said.

Finance Minister Agus Martowardojo said in Jakarta on Friday that the government was set to buy the stake from Nippon Asahan.

Nippon Asahan, which is controlled by the Japan Bank for International Cooperation, owns 58.9 percent of Inalum.

Nippon Asahan is obliged to sell by November 2013 under Indonesian laws regulating foreign ownership of companies.

In 2011, Inalum booked total net income of $91 million on revenue of $577 million.

Hatta said early this year that the government will set aside up to $700 million to buy the Inalum stake. The government will take the funds from the 2012 and 2013 state budgets.

Inalum is the only aluminum smelter in Southeast Asia. Inalum produces 230,000 tons of aluminum a year, with 40 percent of the output sold in the domestic market and 60 percent to the Japanese market.

Indonesian lawmakers and analysts have urged the government not to renew the contract and suggested it be handed over to state companies.

Final affirmation on Inalum’s stake sale came after the government was barred from buying a 7 percent stake in Newmont Nusa Tenggara, the local unit of US mining giant Newmont Mining.