Posco’s steel mill in Indonesia reaps surplus for first time in 4 years

PT Krakatau Posco, the integrated blast furnace steel mill built in Indonesia by South Korean steelmaker Posco, has surpassed the mark of 10 million tons in cumulative sales. Being the only integrated steelworks established by Posco in a foreign land, PT Krakatau Posco is also the sole integrated steel mill in the Southeast Asian region. The South Korean steel firm is seeking to cultivate the Southeast Asian market including Indonesia as a new engine for future growth.

Starting operations in December 2013, PT Krakatau Posco has reaped 10 million tons of cumulative sales in four years and one month since the start of operation. The provisional operating profits calculated from the performance last year stands at 12 million dollars, marking the first surplus for Posco’s joint venture steel mill in Indonesia.

PT Krakatau Posco was launched as a joint project between Indonesia’s state-run steelmaker PT Krakatau Steel, and South Korea’s Posco, which controls a 70 percent stake of it. The steelworks bears a monumental importance for Posco since it is the first integrated steel mill built by the South Korean steel giant, which once had to resort to foreign steelmakers’ help to build their first steel mills in South Korea during the 1960s. An integrated steel mill refers to a type of steelworks that involves the initial process of melting iron ore to extract molten metal.

In March last year, Posco Chairman Kwon Oh-joon chose Indonesia as the destination of his first business trip since he had been reappointed as the top position of the South Korean steelmaker. “Posco will actively cooperate for Indonesia’s effort to build a massive steelmaking cluster,” said Kwon during his meeting with Indonesian President Joko Widodo.

Woo-Shin Han hanwshin@donga.com