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.