Antara News reported that PT Krakatau Steel has won the support of Indonesia's state enterprise minister for a production ramp up plan which will see it seek loans from foreign banks.

Mr Sofyan Djalil state enterprise minister of Indonesia said that "We are supporting the company's efforts in seeking funds from foreign banks because of the uncertainty about the implementation of its initial public offering in the capital market."

PT Krakatau Steel has received a go ahead from Indonesia's House of Representatives to conduct an initial public offering this year, dropping its strategic sales plan. It hoped to raise around IDR 2 trillion from the IPO but it was certain that the plan would be cancelled because of the present unfavorable share market condition.

Mr Djalil said that by cooperating with the ECA, a European banking consortium, the government was expected to be able to secure the loan for the company.

He did not reveal the amount of funds PT Krakatau Steel would seek from the ECA however. He added that "I do not know but the credit will be used for developing the company's production capacity from 2.5 million tonnes to 5 million tonnes by the purchase of new mines in a number of regions."

PT Krakatau Steel needs an investment of up to IDR 16.4 trillion to support its business development plan up until 2012.