PT Indonesia Asahan Aluminum, the only smelter in the country, plans to operate at full capacity this year as low electricity costs help the producer make a profit even after a drop in metal prices.
The smelter in northern Sumatra produced 242,000 metric tons of aluminum last year and will have similar output this year, Yukio Minbu, general manager at Nippon Asahan Aluminium Co., said in an interview. Tokyo-based Nippon Asahan holds a 58.9 percent stake in the smelter, also known as Inalum, while the Indonesian government controls 41.1 percent.
Aluminum producers including Rio Tinto Group and Alcoa Inc. are cutting output and jobs as the global recession slashed demand for the metal used in cars and houses. Norsk Hydro ASA, Europe’s second-largest producer, said March 30 as much as 70 percent of the industry is unprofitable at current prices. The London Metal Exchange benchmark contract has tumbled 50 percent in the past 12 months.
“The smelter is running at capacity with sufficient supply of electricity from a hydroelectric power plant,” Minbu said yesterday. “Output will keep going well as we see no problems of electricity supply after heavy rains since late last year.”
Asahan has profited from the metal production as costs at the smelter are low because the company has its own power plant, Minbu said. The smelter has the capacity to produce 225,000 tons of primary aluminum a year, and ships 60 percent of its output to Japan and the rest to Indonesia.
Aluminum for delivery in three months on the LME gained 2.9 percent to $1,535 a ton yesterday, the highest since Jan. 12. The metal reached a record $3,380.15 a ton on July 11 last year.