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.