September 07, 2008

PT Antam and PT Krakatau ink JV for DRI plant

It is reported that Indonesian mining and minerals company PT Aneka Tambang and steel major PT Krakatau Steel will build a USD 60 million ore processing plant in South Kalimantan province this year.

Both parties signed a joint venture agreement to create Meratus Jaya Iron & Steel. Antam will hold 34% stake in the venture, while the remaining 66% stake will be held by Krakatau.

The plant will have capacity of 315,000 tonne per year initially. The ore processing plant will produce direct reduce iron with all of the output consumed by Krakatau Steel in Banten province. The plant is expected to be built November 2008 and on stream by 2010.

Antam and Krakatau will finance 35%, while the remaining 65% will come from national bank loans.

Mr Fazwar Bujang president director of PT Krakatau said that the joint venture was the follow up to a memorandum of understanding signed by the two companies. He said Mr Fazwar said that "In phase one, the plant will have a capacity to produce direct reduced iron from 315,000 tons of iron ore, which will be used by Krakatau's plant at Cilegon in Banten province.”

In the future, both companies plan to expand the facility's capacity to 1 million tonnes per year and the investment needed on the expansion program is expected to reach USD 600 million.