KS, Posco start $5.8 billion steel plant construction

State-owned steel maker PT Krakatau Steel (KS) and South Korea?s Pohang Iron (Posco) began on Thursday the construction of their first steel plant in Cilegon, Banten in a ground breaking ceremony which was attended by KS?s president director Fazwar Bujang and Posco CEO Joon Yang Chung.

The steel plant which will occupy an area of about 3,800 sq meter near KS?s existing steel plant complex will have a production capacity of 3 million tons in the first stage..

Fazwar said that the construction of the plant, one of two steel plants to be built and operated by a joint venture between KS and Posco, would cost about US$2.84 billion. ?The construction of the first-stage plant is scheduled for completion in 2013. The steel plant will use blast furnace technology,? he added.

Joon Yang said that the steel plant, which would become the first integrated steel factory in Southeast Asia, would be able to meet the growing steel need in Indonesia.

He said that the first plant would produce steel slab and plate with a capacity of 1.5 million tons each a year. ?78 percent of the production will be used to meet the domestic demand and the remaining 22 percent to be exported to other Southeast Asian countries and Middle East countries.?

Joon said that the second plant which would be built soon after the first one has been completed would produce hot rolled coil with a capacity of 3 million tons. He estimated that KS and Posco joint venture would spend about $3 billion for the construction of the second steel plant.

?The larger part of the production will be used for the domestic market. A small part of the production will be shipped to Posco?s plant in Vietnam,? he added. (*)