Krakatau, Posco finally agree to form joint venture

After a long process of negotiations, state owned steel producer PT Krakatau Steel and its Korean partner Pohang Steel and Iron Company (Posco) have finally agreed to sign a joint venture agreement this month.

?Krakatau Steel and Posco will sign the joint venture agreement on July 23 or July 24,? Krakatau?s chief commissioner Ansari Bukhori said in Jakarta last week.

The signing of the joint venture agreement has been delayed due to the Korean company?s insistence to have a 70 percent stake in the planned joint venture, while Krakatau wanted to have at least 45 percent.

Krakatau's president director Fazwar Bujang said the difference on the composition of the share ownership had been settled after the Korean company agreed to increase the Indonesian company?s share ownership to 45 percent.

?Krakatau will increase its share ownership from 30 percent to 45 percent after the construction of the steel plant is completed,? he said.

The joint venture will build a steel plant with a capacity of 3 million tons a year to meet the growing steel demand in the country. The plant?s capacity will be gradually increased to 5 million tons.

Fazwar said that the total investment for the construction of the steel plant was expected to reach $5 billion. (*)