Curug Luhur to build 2 stainless steel plants

JAKARTA (JP): PT Curug Luhur Indah Paradise of Indonesia signed Saturday an agreement with the Tashkent Group of Germany to develop two stainless steel plants.

The project's coordinator, Alex H. Sumarauw, said the two parties agreed to take the initiative to establish a joint venture company, to be named PT Indonesia-Germany Stainless Steel, to build two steel plants.

"Our plants will produce the thinnest stainless steel in Asia with a thickness of 0.15 millimeters to 3 millimeters," Alex said.

The first plant will be built in Samarinda, East Kalimantan and the second, to be built three years later, will be in Timika, Irian Jaya.

The first plant will have a production capacity of 200,000 metric tons per year and is scheduled to be operational within 30 months.

The company plans to export at least 90 percent of its product to Asian countries.

"The new steel building products will be a valuable contribution to increase Indonesia's foreign exchange flow," Alex said.

Alex said the company had secured loan commitments of some US$1 billion from the International Resource Investment Trust and a syndication of 40 banks.

Of the total, the company will use $100 million for pre- operational costs, $400 million for the construction of the first plant and $500 million for the second plant.

The loan will mature in 10 years.

The company plans to pay off its loan from its export revenue and from its futures offering through New York's over-the-counter NASDAQ stock exchange.

Alex said PT Curug Luhur would act as the leader for Indonesian participating companies in the venture with the German group.

Indonesian participating companies are PT Mitara Investment Corporation in Jakarta as project coordinator, PT Karya Kaltim Persada in Samarinda as land provider, PT Curug Luhur as arranger and a commercial bank as underwriter.

Alex said all of the venture company's capital would come from the Tashkent Group, while the Indonesian side would provide government licenses, land, site facilities and banking services support.

Alex said the Indonesian party would have a 72 percent stake in the joint venture.

"We hope to eventually increase our share to 95 percent in 10 years," he said.

The company expects to reach profits of 80 percent to 120 percent due to having lower production costs than companies in other steel producing countries.

Yesterday's agreement was signed by Curug Luhur's president Mounir Bouslama representing Indonesian participating companies, and Hong Kong's Bullet Train and Town Development Co. Ltd. president Chow Wan King, representing the Tashkent Group.

PT Curug Luhur, a resort contractor, currently manages a resort in Curug, West Java. (08)