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Posco, Krakatau Steel Set Up JV for Indonesian Integrated Mill
Aug. 9, 2010 Posco and Krakatau Steel, a state-run Indonesian steelmaker, agreed to establish a joint venture for the construction and operation of an integrated mill in State Enterprises Ministry Building of Indonesia.
The two companies will participate with shares starting at Posco 70% and Krakatau Steel 30%, with the option for Krakatau to increase shares up to 45% after stabilization of the business.
The integrated mill will be carried out in two stages to total 6 million tonnes annually. The first stage of the 3-million-tonne facility will start construction in the second half of this year at the earliest, for completion in December 2013.
The expected construction site is the idle land next to the Krakatau Steel factory located in Cilegon, a harbor city on the northwest coast of Java island.
“I am extremely happy that Posco is given the opportunity to build the first integrated mill in Indonesia, which has great underground resources and growth potential,” said Posco Chairman Joonyang Chung. “We will proactively review investment in various fields including infrastructure and energy through close cooperation with Krakatau Steel.”
Posco notes that this project is a brown field investment, reducing initial investment costs while utilizing the construction and operation experience of the partner, achieving early normalization of operations.
This project will also involve family companies of both partners. Through this joint venture, Posco expects to secure cost competitiveness for both companies with plans to jointly develop steel materials.