PT Inalum faces financial crisis due to slump in aluminum price
PT Inalum faces financial crisis due to slump in aluminum price
MEDAN, North Sumatra (JP): Steady declines in prices and
production, and increases in operational spending have thrown PT
Indonesia Asahan Aluminum (PT Inalum), a aluminum-smelting joint
venture between Indonesia and Japan, into financial crisis.
"We are now suffering from difficult financial circumstances,
due largely to depressed aluminum prices on the international
market and heavy financial burdens," the company's president, T.
Saito, told reporters after a signing a collective labor
agreement (KKB) with the company's workers here yesterday.
The signing ceremony was attended by Director General for
Industrial Relations and Labor Standards Suwarto, the head of the
provincial manpower office, Khairun, Secretary General of the
Association of Indonesian Businessmen Ferdinandus, Chairman of
the All Indonesian Workers Union (SPSI) Imam Sudarwo and Sumaryo,
an official of the Asahan Authority Board.
Japanese Prime Minister Tsutomu Hata recently dismissed a news
report that the Indonesian government has asked the Japanese
Ministry of International Trade and Industry to salvage the
ailing company, saying that the Indonesian government never made
such a request.
The Nihon Keizai Shimbun, a leading financial daily in Japan,
reported last month that the Indonesian government has asked the
Japanese side to shoulder a major part of a capital increase that
the joint venture is planning. They also reported that the
Indonesians had asked Japan to lower the interest rate on their
loan of $1.8 billion to the alliance.
Price
Saito said yesterday that the financial difficulties have
affected the company since 1984 when the aluminum price on the
world market decreased sharply from US$2,000 to $1,300 per ton.
"Aluminum prices since then have remained low," he said.
He said the sharp fall of the price of aluminum was caused
mainly by increased production in members of the Commonwealth of
Independent States, especially Russia.
However, he expressed optimism that the aluminum price would
likely increase in the coming years.
The price has increased slightly to $1,340 per ton in the last
three months, he said.
The joint venture, established in 1976, is 60 percent owned by
Nippon Asahan Aluminum Co. Ltd. of Japan and 40 percent by the
Indonesian government.
The firm, whose smelting factory was located in Kuala Tanjung,
Asahan, some 200 kilometers southeast of the provincial capital,
started manufacturing in 1982 and is one of the largest aluminum-
making footholds for Japan.
Saito said the company's aluminum production slightly
increased to 220,000 tons last year from 200,000 tons in the
previous year.
"This year's production is expected to increase," he added.
(rms)