Australia's BHP Steel plans to buy Krakatau Steel shares

Australia's BHP Steel plans to buy Krakatau Steel shares

JAKARTA (JP): Melbourne-based The Broken Hill Proprietary
Company Ltd's (BHP) steel division BHP Steel is considering
buying shares in state-owned Krakatau Steel, a company
representative said yesterday.

BHP Indonesia president Colin E. Smith told The Jakarta Post:
"We had discussed the issue (the purchase of Krakatau Steel) but
no agreements had been made."

Bisnis Indonesia, quoting an unidentified source, reported
yesterday that the Australian company planned to buy 25 percent
of Krakatau Steel through a private placement.

Smith said BHP had not yet decided how many shares it would
buy from Krakatau Steel which is Indonesia's largest steel
company. Krakatau Steel plans to float its shares on local stock
markets later this year.

PT Krakatau Steel said earlier it planned to increase its
annual production to 7.5 million tons by 2001 from its present
2.6 million tons.

Krakatau Steel President Soetoro Mangoensoewargo said the
expansion program would be financed by the company's planned IPO
and bank loans.

BHP Indonesia has four main businesses here -- copper,
minerals, petroleum and steel, and support businesses such as
engineering, transport and information technology.

BHP operates in the steel sector here through PT BHP Steel
Indonesia, which built coating and paint lines at Cilegon, West
Java in 1993 for about US$55 million, Smith said.

Smith said his company's relations with Krakatau Steel had
been very close since the opening of BHP Steel Indonesia's plant,
which is partly owned Yayasan Dana Pensiun of Krakatau Steel and
Krakatau Industrial Estate Cilegon.

Krakatau imported iron ore from BHP's operation in Brazil and
steel products from its Australian steel plant, he said.

In return, BHP Steel Indonesia bought raw materials to make
its steel building and construction products from Krakatau Steel,
he said. (hen)