POSCO Signed a MOA with Krakatau Steel to Construct an Integrated Steel Mill with an annual production capacity of 6 Million Tons, by Brownfield Capital Investment
POSCO is seeking to enter into the steel-manufacturing business in Indonesia through the construction of an integrated steel mill.
On November 2, POSCO signed an MOA with Indonesia`s state-run steelmaker Krakatau Steel at the Indonesian government office building for the joint construction of an integrated steel mill.
At the MOA signing ceremony, following from the MOU signed in October 2008, CEO Joon-yang Chung and Krakatau CEO Fazwar Bujang agreed to jointly construct an integrated steel mill with capacity of 6 million tons in the Cilegon city, located in the northwestern coast of Java, Indonesia. The first-phase of the construction, with an annual crude steel production of 3 million tons, is expected to begin in the second half of 2011 and to be completed at the end of 2013.
This joint-construction project will adopt the Brownfield capital investment approach, which will allow the partners to fully utilize the existing infrastructure, including harbor facilities, land, industrial water, power, etc. and such method is somewhat different from the Greenfield approach where the partnering companies must invest from scratch, including infrastructure, production facilities, etc. By building the new plant within the land owned by Krakatau Steel, POSCO is expecting to save on initial investment costs and also is anticipating earlier opening of the operation by making the most of its partner`s construction and steel-manufacturing experience. (Related article, page 5)
CEO Chung said during the MOA signing ceremony, “Each of us have 40 years of extensive steel-manufacturing experience, allowing us to ensure the success of our new joint project.“ POSCO will be aggressively reviewing the alternatives to cooperate in various sectors in Indonesia such as infrastructure and energy, said the POSCO CEO.
CEO Fazwar Bujang, too, expressed his confidence: “We have been maintaining a strategic partnership for some time in the global steelmaking industry, and I believe the success of our new joint project will lay the groundwork for national development of Indonesia.“
POSCO is expecting to gain an upper hand of its competitors in price competitiveness by investing in and developing Indonesia`s abundant steel-making resources, such as iron ore, coal, etc. and to forestall the Southeast Asian market which imports more than 30 million tons of steel products each year by completing the integrated steel plant.
Seon-jae Choi (data: Investment Project)
* On November 2, POSCO CEO Joon-yang Chung shakes hands with CEO Fazwar Bujang of Krakatau Steel after signing the MOA at the Indonesian government office in Jakarta to construct an integrated steel mill in Indonesia. From the left: Korea Resources Corporation CEO Kim Sin-jong; Korean Ambassador to Indonesia Kim Ho-yeong; POSCO CEO Chung Joon-yang; Indonesian Minister of Industry Mohamed Suleman Hidayat; Krakatau Steel CEO Fazwar Bujang; Indonesian Minister of Energy and Mining Resources Darwin Zahedy Saleh.
source : posco