The government has said it is seeking to buy control of Indonesia Asahan Alumnium from Japan’s Nippon Asahan Aluminum for Rp 7 trillion ($749 million).
Hadiyanto, the director general of state assets at the finance ministry, said on Monday the government would take the funds from the 2012 and 2013 budget.
The deal has been discussed since late last year. In March, Coordinating Minister for Economic Affairs Hatta Rajasa made a similar announcement, which was touted as a sign Indonesia would be more open to taking over stakes in foreign companies in the future.
Hadiyanto said a government team — composed of officials from the Finance Ministry, the Industry Ministry and the State Enterprise Ministry — was conducting due diligence investigations.
“Based on the Master Agreement, the value of the assets is based on the book value. At present, the rough calculation is less than Rp 7 trillion so the budget allotment for 2012 is at Rp 2 trillion, while in the 2013 state budget it will be Rp 5 trillion,” Hadiyanto told a House of Representatives hearing on Monday.
The government, he said, was still discussing how to manage the firm, known as Inalum, after the takeover.
“We will make sure that there will be no interruption of production at Inalum during the transition period. From now on, it is being studied how Inalum could be managed after the change in ownership from Japan,” he said.
In 2011, Inalum booked total net income of $91 million and revenue of $577 million, Hadiyanto said.
Nippon Asahan, which is controlled by Japan Bank for International Cooperation, tried to negotiate the contract extension at Inalum by putting up $367 million to boost Inalum’s capacity to 317,000 tons.
The company controls 58.9 percent of Inalum, which it is obliged to sell by November 2013 under Indonesian laws regulating foreign ownership of companies.
The Indonesian government owns the remainder of the company.
The contract, drawn up in 1978, saw the company established under a build, own and transfer scheme. It is due to expire in November next year.
About 60 percent of the aluminum produced by Inalum, the country’s only producer of the metal, is exported, while the remainder supplies the local market.
Officials from Nippon Asahan Aluminium were not available to comment.