South Korean steel giant POSCO and Indonesia's state-owned steel producer Krakatau Steel have signed an important investment agreement in Indonesia. The two companies plan to invest a total of 3.5 billion dollars to build blast furnaces and cold rolling mills in Indonesia. South Korean steel producer POSCO is aiming to join a large-scale construction project planned to move Indonesia’s capital from Jakarta to the East Kalimantan province of Borneo.
At a ceremony in Seoul on Thursday, POSCO and Indonesia's state-owned steel producer Krakatau Steel signed a memorandum of understanding on the steel mill project in the presence of Indonesian President Joko Widodo. Under the MoU, POSCO and Krakatau Steel announced that they will add a second blast furnace and a cold rolling mill to the Indonesian steel mill complex by 2026.
The joint venture covers all production processes, from smelting iron ore in a blast furnace to producing steel sheets. The plant’s current blast furnace has an annual capacity of 3 million tons. POSCO and Krakatau Steel plan to double production capacity by adding a second blast furnace to their joint venture in Indonesia. The new blast furnace will increase current capacity to 6 million tons or more.
The Indonesian government will provide POSCO with tax breaks and other incentives. It will also simplify administrative processes to support the Korean steel producer's investments in the country.
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