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Krakatau Steel and Posco ink deal to advance Indonesia’s role in EV industry
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The memorandum of understanding was signed by Investment Minister Bhalil Lahadalla, president director of Krakatau Steel Silmy Karim, and CEO of Posco Kim Hag Dong, and witnessed by President Joko
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T Krakatau Steel (Persero) Tbk, along with the Investment Ministry, signed a Memorandum of Understanding (MoU) with Posco Steel of South Korean on July 28. The agreement signals the South Korean company’s plan to invest US$3.5 billion.
Investment Minister/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia was present at the signing, along with president director of Krakatau Steel Silmy Karim, and CEO of Posco Kim Hag Dong. It was also witnessed by President Joko “Jokowi” Widodo, State-Owned Enterprises Minister Erick Thohir and Public Works and Housing Minister Basoeki Hadimoeljono.
“We are very pleased with the government's support in realizing the expansion of PT Krakatau Posco, which is a joint venture between Krakatau Steel and Posco. We will continue to actively collaborate in implementing the investment plan as agreed. PT Krakatau Posco will become the largest integrated steel company in Southeast Asia," said Silmy.
Silmy noted that this agreement is expected to increase the production capacity of PT Krakatau Posco to reach 10 million tons per year, in both upstream and downstream products. The plan is in line with the government’s strategy to make Indonesia an essential player in the electric vehicle (EV) industry.
"In addition, the collaboration between Krakatau Steel and Posco is also prepared to support the Nusantara Capital [IKN] project where Posco has long experience in the construction of several cities in Korea," added Silmy.
The commitment was welcomed by the Indonesian government, as Minister Bahlil promised to ensure that the ministry and government agencies would provide all the support necessary to Krakatau Steel and Posco for the issuance of permits for projects and investment incentives in accordance with the prevailing laws and regulations in Indonesia.
“I am very pleased with the commitment from Krakatau Steel and Posco for their investment in Indonesia. This investment expansion will certainly contribute greatly to the future growth of the steel industry in Indonesia. We will facilitate and provide full support so that this project runs smoothly. We will help you with the permits. If there is a problem, don't hesitate to report it to us," said Bahlil.
Posco CEO Kim Hag Dong further added that the investment had been well facilitated by the Investment Ministry since the initial stages, and therefore he expressed his confidence in more collaboration moving forward.
"We hope that this investment can make a positive contribution to Indonesia's national economic growth and will continue to improve cooperative relations between Indonesia and South Korea in developing investment in the future," he said.
Posco is the fourth-largest steel company in the world, with a production capacity of up to 42 million tons of steel annually. The multinational company currently has two plants, located in Pohang and Gwangyang in South Korea. It also has investments in several countries in Asia, North America, Europe, and Oceania.
