Japanese Metal Joint-Venture Celebrates 25 Years

ENVIRONMENTAL protection, education and training are high on the agenda.

Encompassing a hydroelectricity plant and the biggest aluminum smelter in South East Asia, PT Indonesia Asahan Aluminum (Inalum) in North Sumatra is the result of a project between the Indonesian government and Japan.
The location made a lot of sense to a group of Japanese investors in 1976 as Indonesia is about halfway between Australia and Japan. Australia has lots of bauxite and not much use for it and Japan’s industrial giants are crying out for aluminum. Their idea was to transport the bauxite raw material from Australia to North Sumatra and produce aluminum for delivery to Japan.

KOZO YAMAMOTO President Director of PT Indonesia Asahan Aluminum

In partnership with the government of Indonesia, the investors – including Sumitomo, Nissho Iwai, Nippon Light Metal Company, and the Marubeni, Mitsubishi and Mitsui conglomerates – decided to set up Inalum.
At a cost of $3.4 billion, the project was a giant leap in the dark, but also a significant step in the growing economic relationship between Japan and Indonesia.
“It was an economic cooperation project, which was aimed at achieving the development of Indonesia (especially in North Sumatra) and at securing a stable supply of aluminum ingots for Japan,” says Inalum President Director Kozo Yamamoto.
“Japan has a lot of business relationships, while Indonesia has a lot of natural resources. Our plant was the first aluminum smelter in Indonesia. One was planned by the Dutch, the Russians, the U.S. and others, but nothing happened.

THE SMELTER can output 225,000 tons of primary aluminum a year.

“Finally, Japan came along to make a proper plan to utilize the energy potential of the Asahan river for the aluminum smelter,” says Mr. Yamamoto.
Power projects were built on the Asahan river, flowing from Lake Toba in North Sumatra, to feed electricity directly to a smelter with an annual production capacity of 225,000 tons of primary aluminum.

The investment decision was prompted by the uncertainty created by the oil crisis of the early 1970s. “The government and those in Japan’s aluminum industry were concerned about the security of aluminum resources available to Japan,” he adds.
Reflecting the equity split between Japanese and Indonesian shareholders, about 60 percent of the output from Inalum is shipped to Japan.

The remaining 40 percent is reserved for domestic demand in Indonesia, where it is used in the manufacture of molded products, cables and aluminum sheets to international quality standards.
Surplus electricity is supplied to the local community, where Inalum also plays a role in training the population. Housing, health, education and recreational facilities are provided for company employees, of whom there are about 2,500.
Protecting the environment is important. Inalum has been awarded the ISO 9002 for its quality control management, and it applies the R3 concept (reduction, recovery and recycling) to its activities. Everything, from the raw materials to the final product, can be recycled into the production process.

“We don’t need financial assis-tance, but we need continuous technology modernization. Many basic industrial technologies can be introduced from other countries.
“Indonesia has a brilliant future in terms of natural and human resources,” says Mr. Yamamoto. “But companies that come here should develop beneficial relation-ships with the local people and not just exploit the resources.”