Chinese steel firm considering relocating production to RI

The Jakarta Post, Jakarta | Wed, 09/29/2010 9:43 AM

China’s state-owned steel company Guo Feng Iron Steel is mulling plans to relocate its Tang Shan production plant to Indonesia in the near future, with a total investment worth US$1 billion, an Indonesian government official says.

The government of China has asked Guo Feng relocate its Tang Shan plant because it is situated in a city area and produces intolerable pollution, Industry Ministry Metal, Machinery, Textiles and Miscellaneous Industries Director — General Ansari Bukhari said Monday.

“The company has visited several countries including Indonesia, seeking a new location for the plant,” Ansari said after meeting Guo Feng representatives at the Industry Ministry in Jakarta.

Guo Feng had approached Industry Minister M.S. Hidayat to ask him directly what support the government could provide foreign investors, specifically those intending to invest in the steel industry.

“In principal, the minister fully supports the relocation plan,” Ansari said.

“The minister will help the company obtain a business permit for the plant, find a site and secure energy supply for its production activities.”

Indonesian steel producer Gunung Garuda president director Jamaludin said Guo Feng was considering relocating here because of Indonesia’s wealth of raw materials, including iron ore.

“Indonesia’s political climate is also stable, so [Guo Feng] feels secure about relocating here.”

Jamaludin said Guo Feng would create a joint venture with Gunung Garuda if the relocation plan was to go ahead.

The plant could be built in Cilegon, Banten, or South Kalimantan, and would produce up to 3 million tons of steel per year, he said.

To support its operations, the plant would need up to 2 million tons of coal per year.

Guo Feng chairman Zang Zhen said he had come to Indonesia on an invitation from Gunung

Garuda, to ascertain how suitable Indonesia would be as a new home for the facility.

“Relations between the governments of China and Indonesia are very good.

“Our government also encourages businesses to invest in other countries, including Indonesia,” he said.

Zang said he had been impressed with Indonesia, and that it would be better suited for steel production than other countries he had visited including Iran.

Jamaludin said he was optimistic that the relocation plan would materialize soon. He added that this year Guo Feng would complete its survey and could begin developing a plant here next year.

The relocation would improve the competitiveness of Indonesian steel products, because the plant would use blast furnace technology, he said.

“Blast furnace machines are not new to China, but in Southeast Asia, this technology has not become popular yet.” (rdf)

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