UPDATE 1-Indonesia takes over Inalum smelter despite no deal on price
By Nina Kusuma Yuka Obayashi
JAKARTA/TOKYO Nov 1 (Reuters) - Indonesia has taken control of the country's only aluminium smelter even though the government and the facility's majority Japanese shareholders have yet to agree a price, Indonesian government officials said on Friday.
Talks over Indonesia Asahan Aluminium (Inalum) reached a stalemate after the Southeast Asian state and the Japanese shareholders, which include Sumitomo Chemicals Corp and Mitsubishi Corp, chose different mechanisms to evaluate the smelter.
"The Inalum assets have officially been acquired by the government of Indonesia and will be converted into a state-owned enterprise," said Hadiyanto, Indonesia's director general of state asset management.
Nippon Asahan Aluminium (NAA), a consortium of 12 Japanese firms holding 58.88 percent of Inalum, has been in talks for several months to sell its stake to the Indonesian government, which owns the rest, and has long hoped to nationalise the smelter.
Industry Minister MS Hidayat said the expiry of Indonesia's 30-year accord with NAA on Oct. 31 meant the two sides will now go to arbitration to set a price for the assets and both had agreed to do so.
Hidayat said the government had decided to acquire Nippon Asahan's stake in a transaction worth $558 million based on an audit of the assets' value on March 31. Earlier, NAA said the Inalum assets are worth $626 million.
"We agreed to an asset transfer and to seek arbitration," he said. "All of the assets have been returned to the government of Indonesia."
But a Nippon Asahan offical denied the two parties had agreed to seek arbitration, and said his side had not received any money for the stake from Indonesia yet. He said the Japanese firm would issue a statement next week.
A Japanese source involved in the deal said the shareholders still hoped to reach an agreement with Indonesia despite the takeover.
"There are still differences over the price of the stake sale between the two parties. Japanese shareholders can not accept the conditions offered by the Indonesian government," said the source speaking on condition of anonymity. He did not specify which conditions were unacceptable.
The Japanese had sought an extension of the Oct. 31 deadline to allow for talks to settle the matter to continue.
Indonesia's takeover of PT Inalum is part of a drive by Southeast Asia's biggest economy to squeeze more revenue from its natural resources. But wrangling over the sale could put off future foreign investment in its fledgling smelter industry.
Inalum is Southeast Asia's only aluminium smelter, and one of only a handful of smelters in Indonesia, which could explain why it is such a desirable asset for Indonesia as it pushes to develop mineral processing facilities along with a controversial 2014 ore export ban rule.
"This can supply domestic aluminium needs, if there are leftovers from exports," Hidayat said, announcing plans to develop a cluster of aluminium industries in Sumatra near Inalum.
A protracted dispute would likely be a setback for Indonesia's metals and mining industry, which has suffered from a combination of heightened regulatory uncertainty and a slump in global commodity prices.
PT Inalum produced 246,000 tonnes of aluminium in the year that ended in March 2012. (Additional reporting by Yayat Supriatna in Jakarta; Writing by Fergus Jensen; Editing by Amran Abocar and Robert Birsel)
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