Argentine giant vies for RI seamless pipe venture
Argentine giant vies for RI seamless pipe venture
By Riyadi
CAMPANA, Argentina (JP): Siderca SAIC of Argentina, one of the
world's largest producers of seamless pipes, is looking to set up
a joint venture with Indonesia's Bakrie Group in order to
penetrate the East Asian market.
A memorandum of understanding was signed on Saturday for the
integrated production of seamless pipes in Indonesia.
The agreement was signed by their respective presidents,
Aburizal Bakrie of the Bakrie Group and Paolo Rocca of Siderca.
"We agree to strengthen our current strategic alliance and
hopefully we will be able to upgrade our current cooperation into
forming a joint venture," Aburizal said at Siderca's headquarters
in Campana, 100 kilometers north of Buenos Aires.
The venture will expand on their current arrangement, in which
the Argentinean company gives technical assistance to Seamless
Pipe Indonesia Jaya (SPIJ), a subsidiary of the publicly-listed
Bakrie & Brothers.
SPIJ commenced commercial production in 1993 at its plant in
Cilegon, West Java. It imports US$20 million a year in unfinished
seamless tubes from Siderca and puts the finishing touches on the
tubes before selling them to its consumers, mostly oil and gas
firms in the region.
"This cooperation is important for us because we want a
backward integration of our industry toward building a hot mill
to produce seamless tubes," Aburizal said.
The $300-million finishing plant in Cilegon has an annual
production capacity of 150,000 tons of seamless pipes. However,
the plant runs at only one-third of its total capacity because of
a limited market.
Aburizal explained that SPIJ cannot compete in the region
because it still imports unfinished seamless tubes from
Argentina, which incurs high freight costs.
SPIJ hopes to put an end to its losses and break even by next
year.
"When we have our own hot mill we will be able to run our
mills more efficiently and compete in the global market,"
Aburizal said, adding that some $250 million will be invested in
the hot mill.
Rocca said his company wants to make Indonesia its main base
in East Asia to challenge the regional domination of Japanese
seamless pipes producer Sumitomo.
"We already supply the market. However, the closer the market
to Japan, the less we can penetrate the market, and we think that
the Cilegon plant could be a platform to serve the region," Rocca
said.
Siderca, together with its affiliated companies -- Dalmine in
Italy and Tamsa in Mexico -- controls the largest market share of
the world's seamless pipes trade with 23 percent, followed by
Mannesmann 19 percent and Sumitomo 12 percent.
Siderca, Dalmine and Tamsa had combined seamless pipes exports
of 1.3 million tons last year, of which 29 percent went to
European and former Soviet Union countries, 21 percent to
countries in the Middle East, 19 percent to Latin American
countries, 11 percent to the United States, 9 percent to China, 8
percent to Africa and 6 percent to East Asia, excluding China.