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Energy and Natural Resources Finance for Alumina Production Project in Indonesia
Realizing Reconciliation of Securing Resources for Japan and Economic Development of Indonesia

  • Region: Asia
  • Energy and Natural Resources
  • Overseas Investment Loans
NR/2011-16
June 13, 2011
  1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed today a loan agreement totaling up to approximately 15.8 billion Japanese yen with PT Indonesia Chemical Alumina (ICA), a company incorporated in the Republic of Indonesia, in which Showa Denko K.K. (Showa Denko) has an equity stake. The loan is cofinanced with Mizuho Corporate Bank, Ltd. and The Sumitomo Trust and Banking Co., Ltd. The total amount of the cofinanced loan, including the portion provided by JBIC, comes to approximately 26.3 billion yen. 
     
  2. The loan will finance ICA, a company in which Showa Denko has a 20% equity stake and PT Antam (Persero) Tbk (“Antam”), a state-owned mining company of Indonesia, holds the remaining 80%, for undertaking an alumina production project in Tayan, West Kalimantan, Indonesia. This is the first alumina production project in Indonesia. ICA plans to have bauxite supplied by Antam, the country’s largest state-owned mining company, while relying on Showa Denko, a company having advanced technology and sufficient experience in alumina production, for technology transfer.
     
  3. Alumina to be produced in this project demonstrates a variety of excellent properties, including high corrosion resistance, high abrasion resistance, and high fire resistance, depending on the type of the product. It is therefore extensively used in a wide range of industries, in applications ranging from water purifiers, steel, construction materials, electrical transmission lines, ceramics, to liquid crystal.  Commercial production is expected to start in 2014, with output of 300,000 tons of alumina annually, of which Showa Denko will get delivery of 200,000 tons mostly for shipment to Japan. 
     
  4. Amid increasing demand for alumina and its raw material, bauxite, against the backdrop of robust economic growth sustained in the emerging countries, this loan supports the securing of a long-term and stable supply of resource that is strategically important for Japanese industries. While Antam, a company which continues to supply nickel ores and others, is one of the most significant resource suppliers to Japan, this is the first transaction in which JBIC provides credit to Antam. Looking forward, JBIC intends to take advantage of this opportunity to strengthen ties with the company. 
     
  5. Meanwhile, the government of Indonesia is moving ahead with the effective use of resources and increasing value added in industries.  Given that this project is one of the projects designated by the Master Plan for the Acceleration and Expansion of Indonesian Economic Development 2011-2025, which the government of Indonesia has drafted, it is expected not only to help secure resources for Japan but also to contribute to the economic development of Indonesia. The project therefore has great significance for both Japan and Indonesia. 
     
  6. JBIC will continue to support the development and acquisition of interests in resources that are strategically important for Japan by performing its functions including project structuring and a risk-taking function.  
     
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).  
     

 

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