Construction of the South Kalimantan steel plant begins
Wednesday, April 8 2009 - 02:17 AM WIB
The groundbreaking ceremony for the Rp 950 billion (1 US$ = Rp 11,375) steel plant located in the province?s Tanah Bambu regency was attended by Vice President Jusuf Kalla, Minister of Industry Fahmi Idris, State Minister for State Enterprises Sofyan Djalil, Minister of Energy and Mineral Resources Purnomo Yusgiantoro and the province?s high-ranking officials.
PT Meratus Jaya?s President Director Anwar Ibrahim said that the steel plant was expected to begin its commercial operation in 2011 and will produce sponge iron with a capacity of 315,000 tons a year.
The firm is 61 percent owned by KS, 31 percent by Antam and 8 percent by the South Kalimantan provincial government.
Anwar said that the iron ore for the sponge iron production would be supplied by PT SILO dan PT Yiwan Mining, which operates iron ore mines in the province. ?The two companies can provide iron ore supply for at least 15 years,? he said.
All of the production will be consumed by KS' steel mills in Cilegon, West Java, the firms said in joint statement with Antam in April 23, 2008.
The investment cost for the project is estimated at about US$60 million, which will likely be funded with 35 percent equity and 65 percent debt provided by Indonesian local banks.
The firms said in the long term the joint venture would build an integrated steel production facilities, expanding its operations downstream to steelmaking and rolling smelters, adding that the downstream facilities could have a capacity up to 1 million tons.
The total project cost is estimated at about $600 million, excluding the costs for infrastructure. KS is expected to produce five million tons per year by 2011 to meet domestic steel demand. (*)