Korea's Posco to develop two steel mills in W. Java
JAKARTA (JP): South Korea's Pohang & Iron Steel Co. (Posco) has embarked on the development of two joint venture steel mills in West Java with a total investment of US$675 million.
One of the projects, a $175-million stainless steel, cold- rolling mill, will be developed in Bekasi in a joint venture with PT Perkasa Stainless Steel Industry.
"We signed the memorandum of understanding for the building of the first Indonesian stainless steel plant this morning," PT Perkasa's president commissioner Sudwikatmono said yesterday.
On Wednesday, Pohang signed a joint venture agreement with state-owned PT Krakatau Steel, PT Nusamba and Korindo Group of South Korea, to build a $500-million mini steel mill in Cilegon.
Sudwikatmono foresaw great market prospects for stainless steel in the country as the domestic demand has been increasing by 44 percent over the past five years.
"The domestic market demand is estimated at 60,000 tons for 1996, all of which has to be entirely imported ," he said, adding that his stainless steel mill would be designed initially with an annual capacity of 75,000 tons.
"Therefore, Indonesia will be able to save between $100 million and $200 million in annual foreign exchange spending after the stainless steel plant comes on stream in 1999," Sudwikatmono said.
Posco's executive president Lee Chun Ho shared Sudwikatmono's bullish projection of the stainless steel market in Indonesia.
Sudwikatmono added that the total investment of the plant, which will produce two types of stainless steel-- Austenitics (300 series) and Ferritics (400 series)-- is estimated at $175 million.
Posco, the world's largest steel company, will own 70 percent of the joint venture stainless steel company which will be set up in February next year with the remaining 30 percent to be held by Sudwikatmono's PT Perkasa.
According to PT Perkasa's vice president Sudhamek A.W.S, the 30 percent share is owned jointly by Sudwikatmono, Rasyid Brasali and Sutanto Yusuf.
PT Perkasa's technical manager Paulus Sutikno said the cold rolled steel coils to be manufactured by the mill will be of 0.5 mm to 3.0 mm in thickness.
The mill will still have to depend on imports for about 70 per cent of its raw materials.
"Imported steel materials are still much better than local ones," Sudwikatmono said.
Sudhamek said that 70 percent of the stainless steel production will be sold in the domestic market and the remaining 30 percent will be exported to the Association of Southeast Asian Nations and China.
Posco and PT Krakatau Steel each own 40 percent of the joint venture mill in Cilegon and Nusamba and Korindo each hold 10 percent.
The construction of the Cilegon steel plant, named PT KS- Posco, will start next year and is expected to be completed in 1999, he said.
The steel plant will be designed initially with an annual capacity of one million tons of hot-rolled steel coils. This will be doubled in the later stage of development. (06)
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