State-owned mining holding company MIND ID plans to spin off its aluminium operations into PT Indonesia Asahan Aluminium (Inalum) Operating, allowing the holding company to focus on long-term business planning and the subsidiary to go public.
Ogi Prastomiyono, director of strategic services at MIND ID, said the separation would make it easier for MIND ID to make new subsidiaries, dominate strategic commodity reserves, establish downstream industries and attract funding, among other long-term plans.
The holding company aimed to execute the spinoff by this year so that Inalum Operating could conduct an initial public offering (IPO) by the end of 2022. MIND ID has yet to determine the amount of Inalum Operating stakes to be sold at the IPO.
“MIND ID could focus more on strategic planning, while operation would be only in its subsidiaries,” Ogi told lawmakers on Monday during a hearing in the House of Representatives. Read also: State mining holding company rebrands as MIND ID MIND ID said it would have “no liabilities or potential liabilities, whether legal, tax or financial,” after the spinoff, implying the liabilities would be passed on to Inalum Operating.
Ogi described focusing MIND ID on strategic planning as the “final form” of the government's mining holding company formation plan under Government Regulation No. 47/2017. At least two state-owned holding companies – one for cement, one for fertilizer – have adopted a similar approach. The regulation formally established aluminium producer PT Inalum as the holding firm for mining companies Bukit Asam, Aneka Tambang (Antam), Timah and Freeport Indonesia.
PT Inalum was rebranded MIND ID following the restructuring. On top of that, the spinoff would enable Inalum Operating to focus on completing its smelter grade alumina refinery (SGAR) project in West Kalimantan that processes bauxite into alumina, which is then turned into aluminium. Inalum currently imports all of its alumina.
President director Orias Petrus Moedak told lawmakers at the same hearing that the separation was the will of the government as the majority shareholder. The State-Owned Enterprises (SOEs) Ministry and Finance Ministry were working on new government regulation and finance ministerial decree to approve the spinoff, ahead of conducting the IPO. “After that is completed, we will discuss the possibility of listing MIND ID,” Orias said.