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Vice President Jusuf Kalla is attempting to convince major
Indian major steelmakers, including Essar, Tata Steel and Ispat Steel,
to invest in Indonesia.
Kalla, who is currently on an official visit to India, told India's
steelmakers that now was an opportune time for them to take advantage
of Indonesia's growing demand for steel.
He said that the development of the steel industry would receive
special attention from the government so as to enable Indonesia to meet
its growing demand.
Despite having abundant iron ore resources, Indonesia still imports
steel products, mostly from China, Japan and Russia, to meet annual
domestic demand of about 3.5 million tons a year.
At present, Indonesia produces about 2.5 million tons a year, with
state-owned steel firm PT Krakatau Steel supplying about two million
tons.
Local products have been losing out to the competition from imported
steel as the products made by Krakatau Steel are more expensive than
those produced by foreign steelmakers.
Local producers, which import most of their iron ore needs from Brazil
and Australia, are apparently unable to compete with the foreign
competition.
According to figures from the Industry Ministry, steel produced in
China costs around US$300 per metric ton, while that produced by
Krakatau Steel costs some $400.
Accordingly, in order to expand and to improve the efficiency of
Indonesia's steel industry, the government, in collaboration with
Krakatau Steel, is encouraging foreign investors to participate in the
planned development of a new US$500 million steel plant with a
production capacity of about 4.3 million tons per year.
"We are interested in the Indian steel companies as they are able to
produce steel more efficiently," Kalla was quoted by Antara as saying.
Among the major Indian steel companies that have expressed an interest
in investing in the project is Tata Steel, one of the biggest steel
producers in the world.
The government has proposed South Kalimantan as the site for the new
steel mill. The province is not only rich in iron ore but also coal to
supply cheap energy to power the mill.
During its visit to Mumbai, the Indonesian delegation, which included
Industry Minister Fahmi Idris, also met members of the Indonesia-India
chamber of commerce.
The Indian members of the chamber also expressed interest in taking
part in the government's infrastructure development program, including
the planned construction of 1,000 kilometers of tolled expressways in
Java, airports and a number of coal-fired power plants.
Several major Indian companies, including Archelor Mittal, now the
world's largest steelmaker, and textile producer Indorama, have long
had operations in Indonesia.
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