Krakatau, Antam name Mandiri to finance S. Kalimantan iron ore plant

State owned steel producer PT Krakatau Steel (KS) and state owned mining firm PT Aneka Tambang (Antam) have appointed Bank Mandiri to finance the development of their US$65 million jointly-owned iron ore smelter in Batulicin, South Kalimantan, Republika reported Thursday.

KS's President Director Fawzar Bujang said in Jakarta Wednesday that Mandiri would provide 70 percent of the total funds needed for the iron ore smelting project, with the remaining 30 percent to come from their internal sources.

A number of banks including Bank BNI, HSBC have also expressed interest in financing the project. "We have secured financial commitment from Mandiri and now (we are)in final negotiation," he added.

He said that KS and Antam would soon establish a joint venture company to handle the project so that the construction could be started in June, next year.

The iron ore processing plant will be able to produce 300,000 tons per year of sponge iron. It will take some 18 months to complete. ?Thus it will start production in 2010 at the latest,? Fawzar said in November 2007.

On Wednesday, Fawzar also said KS was considering an offer from Australia?s Grange Resources to jointly develop a steel manufacturing plant in Malaysia. ?The offer is still general in nature. The details will come out in two or three months,? katanya.

According to him, KS once considered acquiring Malaysian steel company Perwaja Steel Sdn Bhd in order to secure the company's supply of iron pellets, he said. (*)