Arcelor Mittal plans $3b investment

Andi Haswidi, The Jakarta Post, Jakarta | Fri, 04/11/2008 12:00 PM

The world’s largest steelmaker Arcelor Mittal plans to team up with state-owned PT Aneka Tambang (Antam) and PT Krakatau Steel to develop mines and a steel plant at a total investment of at least US$3 billion.

The plan was announced by the Investment Coordinating Board (BKPM) following a visit by CEO Lakshmi Mittal to the State Palace Thursday to discuss the investment plan with President Susilo Bambang Yudhoyono.

Mittal, called by Forbes magazine in March the world’s fourth-richest person with an estimated wealth of $45 billion — up one place from a year ago — owns 44 percent shares in Arcelor Mittal.

“Lakshmi came here with a full team, accompanied by his son, who is also the company’s chief financial officer, and top-ranking officials from the company’s merger and acquisition department,” BKPM chairman Muhammad Lutfi told The Jakarta Post.

After the meeting, Lutfi said, BKPM would facilitate cooperation between the company and Antam for securing the supply of minerals, particularly iron ore, nickel and manganese, and with Krakatau Steel for a feasibility study for establishing a steel plant.

Among locations considered appropriate for the steel plant, he said, was Kalimantan considering the proximity to mineral reserves.

Present during the meeting with the President, the Industry Ministry’s Fahmi Idris said the President was very “positive” on Mittal’s proposal and had ordered the Coordinating Minister for the Economy to issue a detailed formal response.

“The response will include, among other things, a requirement for the company to utilize environmentally friendly technology in its operations,” Fahmi said as quoted by Antara.

According to a statement sent to the Post, the President said he hoped the country would be able to learn from the success of Arcelor Mittal, which currently controls 10 percent of the world’s steel supply for automotive, household and other industrial sectors.

The Mittal family started their global empire by establishing PT Ispat Indo in Sidoarjo, East Java, in 1976, already in the steelmaking business with an initial production capacity of 60,000 tons a year. The company currently produces approximately 700,000 tons a year.

Arcelor Mittal was founded in 2006 when Europe-based Arcelor merged with Mittal Steel, which was formed after Ispat International and LNM Holdings, both controlled by Lakshmi Mittal, merged with International Steel Group in 2004.

“The experience of PT Ispat Indo shows we can meet international quality standards. What we must do now is increase production volume,” the President said.

“I ask BKPM and the two state-owned firms to waste no time. This opportunity must be seized through a joint investment.”