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ArcelorMittal offers $10b to RI
Largest steel maker ArcelorMittal has raised its investment cap for new operations in Indonesia to US$10 billion from $3 billion in a bid to outstrip other competitors in acquiring shares in state-owned Krakatau Steel, an official said
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Largest steel maker ArcelorMittal has raised its investment cap for new operations in Indonesia to US$10 billion from $3 billion in a bid to outstrip other competitors in acquiring shares in state-owned Krakatau Steel, an official said.
Representatives of the Luxembourg-based company met with the Minister of State-Owned Enterprises Sofyan Djalil in Jakarta on Thursday to learn more about the government's plan to privatize Krakatau.
Separately, top officials of Australian-based steel maker BlueScope Steel Ltd. were also in the town that day, meeting the Minister for Industry Fahmi Idris.
Mittal's executive vice president for finance, mergers and acquisition, Sudhir Maheshwari, told reporters during a media briefing that during the meeting, the firm had explained it would spend up to US$10 billion.
"But we still don't know how much we will set aside for buying a stake in Krakatau Steel. We're still waiting for the government's decision on the privatization plan," Maheshwari said.
He added that the company was aiming to hold the maximum 49 percent stake in the company while also acquiring shares or a partnership with PT Aneka Tambang, the country's second largest nickel producer.
"For Mittal there is nothing more critical, nothing more emotional, nothing more sentimental than coming back to Indonesia," he said, nostalgically recalling how the company had its humble beginnings in Surabaya, East Java, in the seventies.
The company first announced its interest in Krakatau early last month during the visit of founder and CEO Lakhsmi Mittal to the presidential palace.
Mittal is focusing on developing markets as economic growth slows in the U.S., where it raised prices in the first quarter because of rising raw material costs.
Last year, the company booked $10.4 billion in net profit, $105.2 billion in revenue and $14.8 billion in operating income. Mittal produced 116 million tons of steel or equivalent with about 10 percent of the global steel production.
After a meeting with BlueScope officials, Industry Minister Fahmi Idris told reporters that the company had explained its readiness to take part in Krakatau's privatization plan and compete with other interested parties.
"As there are many parties which are interested in Krakatau, the process of privatization will be in the form of a tender," Fahmi said.
Currently there are four foreign firms interested in Krakatau, including two Indian-based companies Tata Steel Ltd. and Essar Steel Ltd.
Fahmi said the government had proposed two important requirements for competition -- investment in technology which could help create efficiency, and investment to create new work fields.
Krakatau's president commissioner Taufiequrrahman Ruki said the government should instead sell shares in an initial public offering.
The government is still considering whether to privatize the company through an initial public offering or by conducting a strategic sale where stakes would be sold in blocks to selected potential investors.
