Indonesia's PT Inalum sees aluminium output up 3.4 pct in 2009

JAKARTA, Oct 29 - Indonesia's aluminium producer PT Indonesia Asahan Aluminium sees aluminium production rising 3.4 percent this year on slightly stronger demand, a senior industry official said on Thursday. PT Inalum, which is 58.8 percent-owned by Nippon Asahan Aluminium, expects to produce 254,000 tonnes of aluminium ingot this year, up from 245,526 tonnes in 2008, said Effendi Sirait, chairman of Asahan Authority Board. Asahan Authority Board was established in 1975 and is responsible for managing the Asahan Project in North Sumatra. The project consists of the 604-MW Sigura-gura hydropower plant near Toba Lake which is used to power an aluminium smelter operated by PT Inalum. Nearly 60 percent of Inalum's output will be exported to Japan while the remainder will be sold to the domestic market, Sirait said. "Demand is improving, both in Japan and the domestic market. It may be because prices have gone down this year," Sirait said. Aluminium , which is used in transport and packaging, traded at $1,905 a tonne at 0700 GMT on Thursday, and is up about 24 percent so far this year. However, prices are about 44 percent below an all-time high of $3,380 a tonne, hit in July 2008, due to weak demand from auto makers and other major manufacturers. Inalum, which is 41.12 percent owned by the Indonesian state, sold 192,626 tonnes of aluminium ingot in the first nine months, up 3.6 percent from 186,071 tonnes in the same period of 2008. The government will meet Nippon Asahan Aluminium, a consortium of 12 Japanese firms, next year to discuss the future of the project, he said, as the 30-year contract between the two owners of the project is due to expire in 2013. Anshari Bukhari, director general of metal industry, textile, machinery at the industry ministry, said last year that the government does not want Inalum to extend the contract so that all the output can be sold to the domestic market. He added that the government had talked to state miner PT Aneka Tambang Tbk about the possibility of taking over Inalum. "The government should take over the firm once its contract expires because all its production would cover domestic demand," Sirait said, adding that domestic demand for aluminium -- used in transportation and packaging -- is about 200,000 tonnes a year. Sirait said taking over the smelter would cost about $220 million. (Reporting by Yayat Supriatna; writing by Fitri Wulandari, editing by Sara Webb)