New Base Pursued Just Two Months After Sale of China Plant
Posco is considering establishing a joint venture plant in Indonesia with Tsingshan Group, the world's largest stainless steel producer from China, with an annual capacity of 2 million tons.
According to the steel industry on September 26, Posco is reviewing a plan to acquire a 44.12% stake in Xinheng Metal Indonesia from Makmur International Investment, a Tsingshan affiliate, to pursue joint management. This move comes right after Posco sold its 1.1 million-ton stainless steel plant in China to Tsingshan in July, and is interpreted as an effort to secure a new base in Southeast Asia that is twice as large. However, a Posco representative stated, "The site and specific details have not yet been decided."
Posco has already been operating a 3 million-ton integrated steel mill annually in partnership with Indonesia’s state-run Krakatau Steel since 2013. If this new investment materializes, it will be the second large-scale steel plant Posco operates in Indonesia.
Tsingshan produces more than 15 million tons of stainless steel per year, making it the largest producer globally, but it has been evaluated as lacking in quality competitiveness. In contrast, Posco is considered among the world’s best in terms of technology and quality, so the industry sees the joint venture as a way for both companies to complement each other's weaknesses.
Indonesia is the world’s largest nickel reserve country, providing favorable conditions for sourcing raw materials for stainless steel, and demand for infrastructure construction is also increasing due to the relocation of the administrative capital. Industry experts believe that after Posco streamlined its production facilities in China, it chose Southeast Asia, where local supply and demand are well matched, as its new base of operations.
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