RI firm to buy stake in Australian plant

RI firm to buy stake in Australian plant

SYDNEY (Reuter): A private Indonesian firm, PT Maritosa
Coalindo, has signed a memorandum of understanding to acquire a
10 percent interest in the South Australian Steel and Energy
project (SASE) for US$5 million, the South Australian deputy
premier's office said yesterday.

In a separate agreement, the Indonesian state-owned
Krakatau Steel has agreed provide technical support to the
project in constructing and operating a demonstration plant to
produce pig iron, the deputy premier's office said.

Meanwhile, a source close to one of the existing partners in
the proposed $500 million project, Meekathara Minerals Ltd., told
Reuters the two Indonesian firms have also agreed to purchase one
million tons of pig iron annually from the project.

The latest assessment of the project by Meekathara puts
projected production at about 2.5 million tons a year, starting
in 1998 or 1999.

Korea's LG International Corp. has already expressed interest
in purchasing about 500,000 tons of pig iron a year from the
project, the source added.

South Australia's minister for mines and development, Stephen
Baker, said that, while participation by the Indonesian firms was
significant to the project, there was a "still a long way to go."

"A financial contribution by the Indonesian group will allow
us to fast-track the establishment of a demonstration plant,
which is essential for the commercial application and engineering
design of the Ausmelt submerged lance smelting technology for
ironmaking," Baker said in a statement.

Engineering firm Ausmelt Ltd. and Meekatharra now each hold a
40 percent interest in the project.

The remaining 20 percent is held by the South Australian
government.

Discussions are underway to construct the plant at the vacant
Playford power station building at Port Augusta, South Australia,
Baker said.

Pending final agreements with Maritosa Coalindo and on use of
the power station building, construction of the demonstration
plant could begin later this year, he added.

The SASE partners have proposed developing a steelmaking
industry in South Australia based on the iron and coal resources
in the north of the state, about 100 km south of Coober Pedy.

Technology under development by Ausmelt for the project seeks
to improve on power efficiencies in the steelmaking process.