News Room - Steel Industry

Posted on 27 Jul 2010

Krakatau Steel to invest $1.2 bn in first phase of POSCO jv

PT Krakatau Steel, Indonesia's biggest steelmaker, said on Tuesday it will invest $1.2 billion in the first phase of its joint venture with South Korea's POSCO, using funds from its $390 million IPO in November.

 

Fazwar Bujang, Krakatau's CEO, told Reuters that the first phase of the joint venture steel project would require investment of about $2.7 billion.

 

Krakatau, which will have a 45 percent stake in the project, will have a total investment of $1.2 billion. The joint venture is due to be signed on August 3 after both parties reached agreement on the final terms, he said.

 

"We will use funds from the IPO proceeds this November," Bujang said.

 

"We're going to sell as much as 20 percent, partly to finance the project" he added.

 

Krakatau Steel aims to raise as much as 3.5 trillion rupiah ($387.8 million) in the IPO, and has appointed Deutsche Bank and Credit Suisse as its international underwriters.

 

The project will be divided into two phases with construction of the first phase due for completion by the end of 2013 and production due to start in early 2014 with 3 million tonnes of annual capacity. Total production will reach 6 million tonnes on the completion of the second phase.