Indonesia’s largest steelmaker PT Krakatau Steel (KRAS) and its Japanese partner, Nippon/Sumitomo Steel, will set up a new factory to produce cold-rolled coil (CRC) and galvanized CRC to meet the steel demand from the country’s fast-growing automotive industry.

KRAS and the recently merged Nippon Steel and Sumitomo Metal Corporation (NSSMC) signed an agreement on 26 December 2012 to set up a joint venture to establish the steel factory, which will be built with investment of US$378M.

KRAS will have a 49% stake in the jv, while NSSMC will control the remaining 51%.

The new company will built the factory in the KRAS industrial estate in Cilegon, Banten. It will produce and sell CRC and galvanized CRC for the domestic automotive industry.

Automotive manufacturing has developed rapidly in Indonesia in recent years thanks to steady increases in car sales in the country. The Indonesian Automotive Industry Association (Gaikindo) expects that the number of new cars sold will top one million for the first time in 2012.

Besides partnering with NSSMC, KRAS also signed a joint venture agreement on 26 December 2012 with Osaka Steel Corporation (OSC), a subsidiary of NSSMC, to establish PT Krakatau Osaka Steel which will produce steel beams and other long products for the domestic construction industry. The investment for this will be $216M and KRAS will own a 49% stake and OSC the remaining 51% share, with an option for either company to increase their ownership in the future.

Krakatau Osaka Steel will also be located in KRAS’ industrial estate in Cilegon.

Source: Daily ‘The Jakarta Post’, Jakarta; 28 Dec 2012