The government said on Tuesday that it would spend $700 million to buy the stake held by Nippon Asahan Aluminium in their joint venture Indonesia Asahan Aluminium.
The government will purchase NAA’s 58.9 percent stake in the firm known as Inalum before its working contract ends in 2013.
The Indonesian government, NAA and Japan’s Ministry of International Trade and Industry began negotiations over the sale last year. They continued discussions in February, but those talks produced no results.
The government presented two ownership options for Inalum — that it take full ownership of the company, or that it take a majority stake and allow NAA to continue as a minority partner. The $2 billion joint venture includes a hydro power plant and an aluminum smelter.
The Japanese company wanted to extend its contract for another 30 years by offering a fresh investment of more than $300 million aimed at boosting aluminum production capacity by 80,000 tons per year.
Inalum was set up in 1978 under a build, own and transfer contract that expires in 2013. Inalum’s production of 230,000 tons of aluminum a year accounts for 40 percent of total domestic output.
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