Construction of Gahapi-Nanjing steel mill begins

Minister of Industry MS Hidayat on Friday led a ground-breaking ceremony to kick off the construction of a US$200 million integrated steel mill by a joint venture company in Medan, North Sumatra.

Construction of the steel mill is being carried out by PT Gunung Gahapi Nisco Indonesia, a joint venture between Indonesian steel maker PT Gunung Gahapi Sakti and China?s Nanjing Iron and Steel Co, reports said.

The first phase of construction is estimated to cost $100 million before it moves forward to the next step of development costing another $100 million. The first phase is expected to be completed next year and the second phase by 2017, The Jakarta Post said.

The steel mill is scheduled to start commercial operations next year and produce 500,000 tons of concrete-reinforcing steel and wire rod a year in its initial phase. Its capacity will be upgraded by another 500,000 tons in the second phase.

Reinforcing steel is used in construction applications, while wire rod is usually utilized in automotive production. Demand for both types of steel has been on the rise in recent years, driven by construction and automobile-production booms amid robust growth in Southeast Asia?s largest economy.

Indonesia still secures a substantial proportion of its steel needs from overseas, as local firms cannot meet the full demand or are unable to produce the high-quality steel required for certain applications, such as automobile production.

Nanjing Iron and Steel Co. director Tao Po said the cooperation aimed to produce steel of international quality.

Gunung Gahapi aims to utilize iron ore raw materials abundantly available in Aceh and Padang, West Sumatra. To support the electricity requirement, the company will develop a 50 MW coal-fired power, the coal of which to be supplied from Jambi, Bisnis Indonesia daily said. (*)