Tata may join Krakatau Steel bidding

The Jakarta Post, Jakarta | Sat, 05/03/2008 11:14 AM

The world's fifth largest steel producer, Tata Steel of India, may enter the race to acquire a stake in state-owned PT Krakatau, joining bidders Steel Arcelor Mittal and BlueScope.

The Industry Ministry's director general for metal, machinery, textile and various other industries, Ansari Bukhari, said Friday the firm had sent a letter to the ministry inquiring how it could take part in the privatization.

"Tata Steel's chief executive, Indronil Sengupta, plans to meet with Minister of Industry Fahmi Idris sometime on May 5 or 6. He has some questions on the government's plan to privatize Krakatau Steel," Ansari told reporters at a press conference in Jakarta.

Tata Steel produces hot rolled coil plates, cold rolled coil sheets and wire rods, similar to those of Krakatau Steel. The firm operates in 24 countries, including India, Vietnam and Bangladesh, and has the capacity to produce 28 million tons of steel annually.

On Wednesday, Ansari announced Australian-based BlueScope Steel had asked to meet with the minister on May 8 or 9 to discuss the privatization.

BlueScope operates 114 steel factories in 17 countries, including four of its largest in New Zealand, Australia, Asia Pacific and North America, each with a production capacity of eight million tons per year.

Tata and BlueScope would have to compete with the world's largest steel maker, Arcelor Mittal, which has already made an offer to acquire a 40 percent stake in Krakatau Steel.

On April 10, Arcelor Mittal's owner, Lakshmi Mittal, met President Susilo Bambang Yudhoyono and stated his interest to invest as much as US$3 billion (Rp 28 trillion) in the country's mining and steel companies.

"With so much interest in Krakatau Steel, we'll make the choice based on the investors' ability to provide up-to-date technologies and financial support," Ansari said.

"And the most important thing is the investments must be able to provide jobs and skills for Indonesians."

The government is still considering the possibility of privatizing Krakatau Steel through an initial public offering on the stock market, or by conducting a strategic sale, where a stake would be sold to selected potential investors.

Ansari said the government's privatization program aimed to double Krakatau Steel's production maximum capacity of 2.5 million tons of steel per year.

Krakatau Steel is Indonesia's largest steel maker with assets worth Rp 11 trillion.

"So Krakatau Steel should be certain it could gain a capacity increase to at least 5 million tons of steel a year by the time we're finished with the dealings," Ansari said. (anw)