KS to buy 100,000 MTPA of pig iron from Yogyakarta project

State owned steel firm PT Krakatau Steel (KS) and local firm PT Jogja Magasa Mining had signed a heads of agreement (HoA) to buy 100,000 tons per annum of the first pig iron product from Yogyakarta ironsands project, Australian mining firm Indo Mines Ltd said Tuesday.

Indo Mines will finance the development of the ironsands project as part of its earn-in requirement to acquire a 70 percent interest in the project. The Indo Mines? partner, PT Jogja Magasa Mining, will retain a 30 percent interest in the project.

Indo Mines said Tuesday that the HoA will start no later than 2010 and continue for a minimum 15 years. The HoA is non exclusive and the commercial terms non binding, with formal binding agreements to be settled within 12 months.

The surface sand resource at the Yogyakarta deposit contains an equivalent of about 39 million tons of iron which is sufficient for the development of the deposit and production of 500,000 tons of pig iron annually for a minimum of 20 years, Indo Mines said on Nov 20, 2006. (denny)