KS, Posco join hands to build largest steel mill

The Jakarta Post, Jakarta | Wed, 12/02/2009 9:22 PM

PT Krakatau Steel, Indonesia’s largest steel maker, and South Korea’s giant Posco may start in August the construction of an integrated US$6 billion steel mill capable of producing 6 million tons — the country’s largest.

By 2013, when the construction of the mill to be located in Banten’s Cilegon is scheduled for completion, the country would be able to cut steel imports by at least 20 percent, Krakatau Steel president director Fazwar Bujang said on Wednesday.

Fazwar was speaking to reporters following Wednesday’s signing of a Memorandum of Agreement (MoA) with Posco, or Pohang Iron and Steel Corporation, on a joint venture to establish the mill.

“Of the total $6 billion, Posco will fund 70 percent and Krakatau Steel 30 percent. But in the end, we will have 45 percent of the shares, while Posco will have 55 percent,” he said, adding that Krakatau Steel’s share of funding for the investment would come from the company’s equity and bank loans.

South Korean ambassador to Indonesia, Ho Young Kim, who attended the signing, said that Posco’s investment in the joint venture was the biggest single investment among South Korean companies. (adh)