Following the splitting off from its holding company MIND ID (Mining Industry Indonesia), PT Indonesia Asahan Aluminium (Inalum) Operating will launch an initial public offering (IPO) in 2023. MIND ID will be a separate legal entity as a strategic holding company while Inalum Operating will resume its role as a full-service operations company.
“The process is still ongoing. The reorganization is the final form of the MIND ID, which will be a completely strategic holding company. In addition, Inalum Operating intends to focus on downstream and become a publicly traded company,” Niko Chandra, MIND ID’s Head of Institutional Relations, told Indonesia Business Post on August 23, 2022.
Inalum spokesman, M. Jufri, said the company would launch the IPO next year. “The company is preparing for the event by communicating with several consultants,” he said.
Jufri said Inalum had not set a target for the amount raised from the IPO and who would be the underwriter for the IPO. The money raised from the IPO will be used to increase the company’s productivity.
Gaining attention
CSA Research Institute Senior Analyst Reza Priyambada said that Inalum was receiving huge attention from market players due to the increasing price of the commodity. “Whether the company’s shares are attractive or not in the future, investors still take into account some factors such as fundamentals and potential liquidity,” he said.
The liquidity of the shares depends on the number of shares that will be released to the public. Even if only a small percentage of shares is released, some market players will be unable to acquire some shares. Ultimately, the investor’s interest will decline. The downstream mineral industry remains attractive to investors.
“However, Inalum does not produce minerals like energy, bauxites and aluminum that can be processed into intermediate and finished products for the needs of consumers,” Priyambada said.
Tri Sasono, Secretary-General of the State-Owned Enterprises (SOE) Workers Federation, refused to comment on the Inalum’s IPO plan. “I have no rights to respond to this because I have not received order from the presidium of the SOE Workers Federation,” he said.
Upcoming smelter projects
According to the company’s statement, Inalum is developing a smelter-grade alumina refinery in a joint venture with another state-owned mining firm PT Aneka Tambang (Antam) under PT Borneo Alumina Indonesia (BAI).
The Alumina Plant Construction Project will be managed by PT BAI and constructed on 288 hectares in three villages in Mempawah Regency, West Kalimantan. With an initial capacity of 1 million tons per year, the Smelter Grade Alumina Processing Project will be able to process alumina for smelting purposes. Moreover, the project will include a 3 x 25 MW Coal Power Plant.
This project is estimated to require an investment of US$850 million (including IDC [interest during construction] and working capital) and is expected to begin production in early 2022. In West Kalimantan, particularly in Mempawah regency, this project is expected to ignite the economy by providing additional regional income, direct and indirect employment and community empowerment programs.
Aside from the upcoming smelter project, Inalum is expanding its Kuala Tanjung smelter capacity in North Sumatra.
According to Jufri, the bauxite smelter currently produces 250 thousand tons of bauxite annually. By upgrading the technology and making modifications, the smelter should have a capacity between 200 thousand tons and 400 thousand tons. “It is a long-term plan,” he said.
Inalum stated that the technology improvement project’s purpose is to improve the aluminum melting pot technology, which previously operated from 193 kA to 235 kA. The technological advancements in Potline 1 are expected to result in the addition of 170 pots, increasing to 25,000 tons of aluminum produced annually for Inalum.
