Essar to invest US$1 billion in integrated steel industry in C Kalimantan

Jakarta (ANTARA News) - Indian steel maker Essar International Steel Ltd has begun taking initial steps toward realization of its plan to build an integrated steel industry in Central Kalimantan with an investment of about US$ 1 billion.

A few details of the Indian company`s plan were disclosed in an expose of Central Kalimantan`s iron ore and coal potentials relevant to the project`s feedstock needs which took place at the Industry Ministry here Friday in the presence of Essar executives, Industry Ministry and Central Kalimantan provincial government officials.

"Essar is seriously committed to its plan to build an upstream plant in Central Kalimantan producing pellets (hot briquette iron) that will be integrated with its plant in Cilegon (Banten province in Java) as the market of its downstream products is mainly in Java," Anshari Bukhari, director general of metal, textile and multifarious industrial machineries at the Industry Ministry, said.

At present, Anshari said, Eassar was conducting studies on Central Kalimantan`s iron ore deposits as the planned pellet plant with a design production capacity of two million tons of pellets a year would need about seven million tons of iron ore as feedstock.

"They (Essar) have asked for an iron-ore mining concession to be ensured of supply of iron ore to produce two million tons of pellets a year. They want a concession valid for 30 years because they would need a total of about 200 million tons of iron ore. They have also requested the needed mining permit and certainty about the availability of the needed infrastructure," he said.

The Indian company also wanted certainty about a ban on export of iron ore to ensure uninterrupted iron ore supply while they felt sufficiently assured about the availability of coal as an energy source.

Anshari said Essar`s planned integrated steel industry would lessen Indonensia`s dependence on imported steel. The country`s need for steel now stood at 6.5 million tons and it was still importing about two million tons a year. The domestic need for steel was expected to increase to 10 million tons by 2010.

Meanwhile, PT Essar Indonesia President Director KB Trivedi said the funds needed to set up the integrated steel industry would all be provided by the company.

He said India was now actively setting up steel plants in a number of countries to meet its own need for the commodity as well as for export.

"So the plan to build a steel industry in Indonesia fully accords with our government`s policy so that we will continue our efforts to become one of the world`s biggest steel producers," he said.

He said during the first six months of its operations in Indonesia, Essar would make a feasibility study on the availability of iron ore in Central Kalimantan, namely in the Murung Raya, Barito Utara and Pulang Pisau districts. "If the deposits in these regions prove to be insufficient, we will explore other places," he said.

Djoko Subagyo, PT Essar Indonesia`s technical adviser, said the company already obtained a permit to set up the integrated steel industry in Central Klimantan and Cilegon from the Indonesian governemnt`s Capital Investment Coordination Board (BKPM) in November 2008.

He said Essar would need at least 240 million - 300 million tons of iron ore and sufficient quantities of coal to produce steel over a period of 30 years."These matters are what we are now still studying," he said.