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tate-owned steelmaker PT Krakatau Steel is set to supply its steel products to Chinese car manufacturer SAIC-GM-Wuling (SGMW) once the latter'€™s factory in Indonesia begins to operate.

Industry Minister Saleh Husin said Monday that Krakatau Steel had established a joint venture with Japan'€™s Nippon Steel & Sumitomo Metal Corporation (NSSMC) to produce automotive steel.

Saleh told reporters on Monday that the joint venture would sell its automotive steel products to local car manufacturers, including SGMW'€™s local production unit, which will manufacture the Wuling-branded car.

He did not elaborate on the amount of steel products that Krakatau would be able to supply, but said the plan had been confirmed.

Krakatau Steel corporate secretary Iip Arief Budiman said, however, that he had not been informed about the planned cooperation with Wuling yet, saying that the plan may still be at the ministry level. '€œWe haven'€™t got any information regarding the matter, but we will certainly welcome the partnership should we be assigned to it,'€ he said.

In December 2012, Japanese steel giant NSSMC and Krakatau Steel formed a joint venture named PT Krakatau Nippon Steel Sumikin (KNSS).

The joint venture is based in Cilegon, Banten, and engaged in the manufacture and selling of cold-rolled steel and hot-dip galvanized steel products for automotive application in Indonesia, according to information published on KNSS'€™s website.

KNSS is set to commence operations in the middle of 2017 with a production capacity of 480,000 metric tons a year. Its production plan is now in the construction stage, the website reveals.

Krakatau Steel itself has a production capacity of 3.15 million tons a year at present, with the utilization rate expected to reach 60 to 70 percent this year, according to Iip.

The state-owned enterprise planned to partner with South Korean steel producer Posco to boost its steel output to between 7.5 million tons and 10 million tons a year, he went on.

'€œWe'€™re still conducting further studies to assess whether our Cilegon cluster will be feasible for the production boost,'€ Iip said, adding that supporting infrastructures was also taken into account.

Saleh said the Wuling factory, which would mainly manufacture multipurpose vehicle (MPV) cars, was expected to become a production hub for both the domestic and the Southeast Asian market.

SGMW, which has the biggest market share in the Chinese car market, is in the process of constructing its factory worth up to US$700 million in the Deltamas industrial estate of Cikarang, West Java.

The plant is expected to begin operating in July next year with an annual output of 150,000 Wuling cars, SGMW'€™s local unit representative has previously announced.

Indonesia is currently the second-largest car producer in the ASEAN area, surpassed only by Thailand.

In the January-August period last year, Indonesia produced 740,385 automobile, while Thailand manufactured a total of 1.26 million, according to data from the Association of Indonesian Automotive Manufacturers (Gaikindo).