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Sebuku iron ore smelter project needs us$2 billion.

The Sebuku Group will needs an estimated US$2 billion to finance the construction of an integrated iron smelter project on the island of Sebuku, South Kalimantan. Based on a report released by the Sebuku Group to the Industry Ministry, the Sebuku Group has a potential reserve of 360 million tons iron ore equivalent to 100 million tons iron metal. Construction of the iron ore smelter is carried out by four business units of the group--PT Sebuku Iron Lateric Ores (SILO), PT Ikatrio Sentosa, PT Banjar Asri in Pulau Sebuku and PT Banjar Asri in Pulau Laut.

In its first investment plan, the Sebuku Group will build a number of production facilities such as rotary dry kiln, coal upgrading station, and coal mill on the island of Sebuku, South Kalimantan. In the second phase the group would build reduction plant, magnetic separation, power plant and a port in the same location. Construction will start in the third quarter of 2014 and the facilities are to be operational in quarter IV of 2016. Harjanto said in the third phase, the Sebuku Group will build an electric arc furnace (EAF) in East Java to start in quarter I of 2015 and to be operational in quarter IV of 2017. Altogether the projects are expected to produce billet or other finished products. The Sebuku Group will need power plant with a capacity of 300 megawatts (MW).

The investment needs support to fulfill steel requirement in the country. The Iron and Steel Industry Association (IISIA) said in 2020, the national consumption of steel would reach 20 million tons. A number of investors have indicated interest in building steel industry in the country following the implementation of the law banning exports of mineral ores. Among the companies planning investment in iron and steel sector include Wuhan Iron and Steel Group (Wisco) from China. Currently Wisco is in the process of procuring 1,500 hectares of land. PT Gunung Gahapi Sakti (Gunung Gahapi) already invested US$100 million in Medan, North Sumatra in cooperation with Nanjing Iron and Steel Group Co (Nanjing Steel).

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Title Annotation:Corporate News in Brief
Publication:Indonesian Commercial Newsletter
Date:May 1, 2014
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