Indonesian Chinese Steel Synergy Unfolds

Indonesian steelmaker PT Krakatau Steel and Zhongnan Iron and Steel Company, a subsidiary of China's Baowu Group, have signed a
PT Krakatau Steel
PT Krakatau SteelImage Source: PT Krakatau Steel


Indonesian steelmaker PT Krakatau Steel and Zhongnan Iron and Steel Company, a subsidiary of China's Baowu Group, have signed a memorandum to enhance steel production. They plan to build a new steel plant in Indonesia with an initial capacity of 2 million metric tons, scaling up to 4 million metric tons. The project is estimated to cost $1.2 billion.


PT Krakatau Steel, an Indonesian steel giant, has recently entered into a partnership with Zhongnan Iron and Steel Company, part of China-based Baowu Group. According to reports, the two companies have signed a memorandum of understanding to fortify their cooperation in the steelmaking sector.

The most striking feature of this partnership is the planned construction of a new steel plant in Indonesia. The plant aims to have an initial production capacity of two million metric tons of long steel per year. Moreover, the companies have visions to double this output to four million metric tons annually in the future.

In addition to the new plant, an existing wire rod mill at Krakatau Steel’s facility will be upgraded. They also plan to construct a new basic oxygen furnace and a billet casting facility at the same location. These upgrades are designed to make the facility more competitive and efficient.

The overall investment for this collaborative project is pegged at $1.2 billion. This is a significant commitment from both parties and underscores the scale and ambition of this initiative.

This strategic move comes at a time when the steel industry globally is grappling with challenges such as fluctuating demand and rising raw material costs. The new plant is seen as a way to not only bolster production but also to diversify the product offerings of both companies.

For Indonesia, this is a key development. The country has been seeking to escalate its manufacturing capabilities and the new plant will likely act as a catalyst in this endeavor. For Baowu Group, it represents a strategic expansion of its footprint in the Southeast Asian market, which is known for its high growth potential.


The collaboration between PT Krakatau Steel and Zhongnan Iron and Steel Company is a pivotal step for both companies and the steel industry in Southeast Asia. With a significant investment of $1.2 billion, the project aims to elevate production capabilities and give both companies a competitive edge. Only time will tell if this joint effort will succeed in bringing the envisioned benefits to the steel sector in Indonesia and beyond.

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