Asahan to reduce aluminum production

Asahan to reduce aluminum production

TOKYO (Reuters): Indonesia's PT Indonesia Asahan Aluminum will cut output in 1998/99, starting on April 1, due to production problems caused by a water shortage there, Nippon Asahan Aluminum Co Ltd said yesterday.

An official at Nippon Asahan Aluminum, which owns 59 percent of the Indonesian smelter, told Reuters: "There's no doubt that we will be cutting output. We're currently considering the level (of the cuts)."

The smelter, in which the Indonesian government holds the remaining 41 percent, estimates aluminum production will total about 220,000 tons in the business year to March 31, the official said.

Water levels at lake Toba, in Indonesia's North Sumatra Province, have fallen to 903 meters, just above the critical level of 902.4 meters, possibly due to El ino weather conditions, he said.

Indonesia Asahan uses water from the lake to generate electricity for aluminum production,

In 1990/91, the smelter slashed output to less than 190,000 tons due to the same problem, the official said.

Asked if the smelter might reduce its 1998/99 output to levels similar to 1990/91, the official said: "Yes, it's possible if it fails to rain in the near future. At the moment we are considering how to cut output at minimum costs."

He added that Indonesia Asahan Aluminium will send about 60 percent of its 1998/99 output to Japan in line with Japan's shareholding in the smelter.

The official said the rest goes to the Indonesia government, which holds the remaining 41 percent.

"This is not going to change unless we re-arrange shareholdings," the official said.

Normally, the Indonesian share supplies aluminum processing plants within the country but traders said these are working at sharply reduced rates because of the country's worst economic crisis in decades, and the metal may be shipped elsewhere.

The official at Nippon Asahan Aluminium, which owns 59 percent of the plant on Sumatra island, said the rest goes to the Indonesia government, which holds the remaining 41 percent.