Essar to invest US$1 billion steel industry in C Kalimantan

Indian steel maker Essar International Steel Ltd has begun taking initial steps toward realization of its plan to build an integrated steel industry in Central Kalimantan with an investment of about US$ 1 billion.

 

"Essar is seriously committed to its plan to build an upstream plant in Central Kalimantan producing pellets (hot briquette iron) that will be integrated with its plant in Cilegon (Banten province in Java) as the market of its downstream products is mainly in Java," Anshari Bukhari, director general of metal, textile and multifarious industrial machineries at the Industry Ministry, said.

 

At present, Anshari said, Eassar was conducting studies on Central Kalimantan’s iron ore deposits as the planned pellet plant with a design production capacity of two million tons of pellets a year would need about seven million tons of iron ore as feedstock.

 

Anshari said Essar’s planned integrated steel industry would lessen Indonesia’s dependence on imported steel. The country’s need for steel now stood at 6.5 million tons and it was still importing about two million tons a year. The domestic need for steel was expected to increase to 10 million tons by 2010.

 

Meanwhile, PT Essar Indonesia President Director KB Trivedi said the funds needed to set up the integrated steel industry would all be provided by the company.

 

He said during the first six months of its operations in Indonesia, Essar would make a feasibility study on the availability of iron ore in Central Kalimantan, namely in the Murung Raya, Barito Utara and Pulang Pisau districts. "If the deposits in these regions prove to be insufficient, we will explore other places," he said.

 

Djoko Subagyo, PT Essar Indonesia`s technical adviser, said the company already obtained a permit to set up the integrated steel industry in Central Klimantan and Cilegon from the Indonesian governemnt`s Capital Investment Coordination Board (BKPM) in November 2008.

 

He said Essar would need at least 240 million - 300 million tons of iron ore and sufficient quantities of coal to produce steel over a period of 30 years. "These matters are what we are now still studying," he said.

 

Earlier, Essar Group will build a pellet factory at a cost of US$500 million on South Kalimantan island to strengthen its presence in the country’s steel industry, Anshari Bukhari said in Nov 2006.

However, none of the Essar Group's investment plan in steel industry in Indonesia has yet to be realized. (*)