15 Juli 2008
ArcelorMittal to build two steel factories in Indonesia

The worlds largest steel maker, ArcelorMittal, plans to build two steel factories in Indonesia with a total investment of US$6 billion, the Investment Coordinating Board (BKPM) says.

"They have come to us and discussed a plan to build two steel factories in Pasuruan, East Java and in Banten province," BKPM head M. Lutfi said Monday during a hearing with the House of Representatives Commission VI overseeing trade, industry and investment affairs.

Lutfi said Mittal had already purchased 100 hectares of land in Pasuruan on which to build a steel factory, and that it was still seeking an appropriate site in Banten.

"Each factory is expected to produce two million metric tons of steel (per year)," he said.  Lutfi said the Luxembourg-based company would return next week to further discuss the plan.

Mittal had earlier proposed to buy a maximum 49 percent stake in state steel company PT Krakatau Steel with an offering of $10 billion. The proposal was opposed by Krakatau's management and workers, who said the company should instead be privatized through an initial public offering (IPO).

The state ministry of state enterprises and lawmakers eventually agreed an IPO would be the best option, but have yet to decide how many shares will be made available.

Mittal is awaiting the governments response to its proposal to directly buy shares in the company, but has said it would also consider buying shares through the IPO.

Four other global steel giants have expressed interest in acquiring stake in Krakatau, including Australian-based BlueScope Steel and Indian-based Tata Steel.

Mittal has reportedly turned its attention to supplyingdemand in emerging markets, including increasing its investment in Indonesia, to leverage against a U.S. economic slowdown.

Last year, the company booked $10.4 billion in net profit, $105.2 billion in revenue and $14.8 billion in operating income. It produced 116 million tons of steel, or equivalent to 10 percent of global steel production.

(Source: The Jakarta Post)

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