Chinese steel giants to build factories in Indonesia Page all

JAKARTA, KOMPAS.com – Origin steel giant China, Nanjing Nangang Iron & Steel United Co. (Nangang), plans to build a factory in Indonesia. If realized, Nangang’s invested capital will be one of them investation the largest that entered Indonesia.

Reporting from Mysteel, Monday (14/12/2020), Nanjing Nangang Iron & Steel United Co. will build steel factory first in Indonesia with a capacity of 2.6 million tons per year.

The Indonesian steel market is still fairly large and has the opportunity to be entered by Chinese steel companies by building factories directly in this country.

Indonesia has also been one of the importers of steel from China. Several times, steel products from China have been subject to dumping regulations in the country.

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Apart from a large market, foreign steel producers are also interested in Indonesia because of the abundant availability of raw materials, especially due to the large amount of coal mining in Indonesia. Coal is an important raw material in the steel industry.

“Due to the size of our large capacity, the demand is large, but the supply of coke (coal for steel smelting) is decreasing due to the capacity reduction scheme in China,” one Nangang official was quoted as saying. Mysteel.

The location of Indonesia which is close to Australia is also the reason. Given that Indonesia can be a stepping stone for companies to export more steel to the Kangaroo Country.

Nangang itself is one of the largest coal companies in China. The company is headquartered in Jiangsu, Eastern China.

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Nangang glanced Morowali as a candidate for his new factory in Indonesia. The construction of this steel factory is estimated to cost around 383.5 million US dollars.

The plant will include 4 smelting furnace facilities whose construction will take approximately 18 months. But when the construction of the factory construction began, there was no official statement from the company.

To accelerate the realization of factories in Indonesia, Nangang is partnering with a Chinese company that has already invested in Morowali, namely the Tsingshan Group.

Tsingshan Group is a Chinese company that has built smelter facilities in Indonesia and helped build the Morowali Industrial Park area.

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The two companies formed a joint venture called PT Kinrui New Energy Technologies Indonesia. Nangang holds a 78 percent share, the rest is owned by Tsingshan.

Previously, the Head of the Investment Coordinating Board (BKPM), Bahlil Lahadalia, revealed one of the reasons why the value of Chinese investment entering Indonesia was so high in the last few years.

The investment value from the Bamboo Curtain country has even overtaken Japan a few years ago. He said, there were several striking differences between investors from the two countries.

“Japan has too much research. Other countries too. The debate is begging for mercy. Indeed, investors from China are a bit desperate, like us, the investors from China.

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He gave an example, many Chinese companies have built mineral ore processing facilities or smelters in various regions in Indonesia.

In fact, a smelter is a fairly difficult investment because its construction requires huge funds, high technology, and must build readiness for the supply of raw materials.

“For example, nickel. Almost all of the smelters now come from China. But from their point of view, this is the bravest one,” said Bahlil.

Bahlil also acknowledged that not all Chinese investors are good and compliant. Therefore, the government is trying to bind Chinese investors with clear business agreements so as not to cause harm to either party.

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“Now our task is how when they invest, we must tie them in a clear and clean agreement so that they do not cause things that are not loss oriented,” he said.

The former Chairman of Hipmi said that particularly in the mining sector, courageous investors are needed because this sector is high risk.

“So coincidentally, investors from China are brave enough. But, let’s not follow this courage without concluding with good rules. This is now our job that we have to do,” he said.

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