Southeast Asia's only aluminium smelter, Japanese-owned PT Indonesia Asahan Aluminium, expects to produce about 13 percent more metal in the current fiscal year, which ends on March 31, a company official said on Wednesday. Higher water levels at Lake Toba in northern Sumatra, the main source of water for the nearby smelter's hydroelectric power plant, would allow the company to boost output of aluminium, which has risen about 12 percent in value in the last year.
"When the water level is high enough, we'll produce as much as we can," said T. Deddy, a senior manager at PT Indonesia Asahan Aluminium.
He said the company, also known as PT Inalum, planned to produce 234,608 tonnes of aluminium in the fiscal year between April 2004 and March 2005.
This compares to 206,952 tonnes in the previous fiscal year and about 163,000 tonnes a year earlier.
Aluminium, used in the auto, packaging and construction sectors, traded at its highest in 9-1/2 years - $1,972 a tonne - at the end of December, as the market braced for a shortage of Chinese metal.
China's domestic demand is expected to grow more than 10 percent annually over the next three years, while Beijing has imposed a series of measures, including a 5 percent export tax, to curb growth in the power-hungry sector.
PT Inalum sells about 60 percent of its output to Japan, Deddy said, and the rest to domestic customers.
The company is owned 59 percent by Nippon Asahan Aluminium Co Ltd, a 12-company Japanese consortium that counts among its members Sumitomo Chemical Co Ltd, Nippon Light Metal Co Ltd, Sumitomo Corp, Mitsui and Co Ltd, Marubeni Corp and Mitsubishi Corp.
The Indonesian government holds the other 41 percent.
Deddy said the smelter's design capacity was 225,000 tonnes a year.
Most of the smelter's alumina, the main raw material from which aluminium is smelted, comes from Australia, where large suppliers include Rio Tinto's Comalco unit and BHP Billiton.
Aluminium for three-month delivery on the benchmark London Metal Exchange was trading just below $1,850 a tonne on Wednesday in Asia.