Asahan cuts operating rate to 40 percent

Asahan cuts operating rate to 40 percent

TOKYO (Reuters): Nippon Asahan Aluminum Co Ltd said yesterday
it had cut the operating rate of its aluminum smelter in
Indonesia to 40 percent in mid-June due to low water levels at a
lake that supplies power to the plant.

"Unless there is a major change in the situation, we have to
be prepared to run only 190 furnaces throughout 1998/1999," an
official at Nippon Asahan told Reuters.

"Our output for the year to end-March is likely to drop to
around 105,000 tons, down by 120,000 tons from our usual levels
when we can operate the plant at full capacity," he said.

Nippon Asahan owns 59 percent of PT Indonesia Asahan
Aluminum, which runs the aluminum smelter in Sumatra. The
Indonesian government holds the remaining 41 percent stake.

The official at Nippon Asahan said: "The water levels (at Lake
Toba) have remained at a minimum level of 902.4 meters. We're
also entering a season when we can't expect much rain."

He said there were 510 furnaces at the smelter, but due to
improved efficiency it could now produce 225,000 tons of
aluminum a year with 470 furnaces.

Asahan said it had been considering further production cuts
due to the water shortage since May.

In April, it reduced its production plans for the current
fiscal year to 175,100 tons.