Japan, Indonesia close to finalizing Inalum handover: source

Japanese consortium Nippon Asahan and the Indonesian government are close to finalizing the handover of the 250,000 mt/year Asahan aluminum smelter, a Japanese source familiar with the negotiations said Monday.

"We are continuing the negotiations and are likely to strike an agreement with the Indonesian government soon," the Japanese company official said.

The Indonesian government took full ownership of the 250,000 mt/year Indonesia Asahan Aluminium, or Inalum, smelter November 1 after the JV's master cooperation agreement expired October 31. The smelter had previously been owned 58.88% by the consortium of 11 companies and 41.12% by Indonesia.

The Jakarta Post reported November 14 that the two parties had agreed in principle on a tentative valuation of Inalum's assets at $556 million, with the final figure to hinge on an independent audit. If the analysts' valuation differs from the provisional price by more than $20 million, the two parties will seek settlement international arbitration, according to the report.

The official Monday said the Inalum smelter was unlikely to export aluminum to Japan, ruling out talk in the market that the sales relationship with the Japanese companies would continue after the ownership transfer.

"I understand Indonesia's domestic demand is 500,000 mt/year. The Inalum smelter is capable of supplying only half the domestic requirement. The primary purpose of the Indonesian government taking over the smelter is to satisfy the growing local demand," the official said.