Indonesian Industry Minister MS Hidayat on Friday kicked off the construction of a USD 200M integrated blast furnace by a joint venture company in Medan, North Sumatra. Construction of the steel mill is being carried out by PT Gunung Gahapi Nisco Indonesia, a joint venture between Indonesian steel maker PT Gunung Gahapi Sakti and China’s Nanjing Iron and Steel Co.
The first phase of construction is estimated to cost USD 100M before it moves forward to the next step of development costing another USD 100M. The first phase is expected to be completed next year and the second phase by 2017. It will start commercial operations next year, and will produce 500,000 tons of concrete-reinforcing steel and wire rod per year in its initial phase. Its capacity will be upgraded by another 500,000 tons in the second phase.
Gunung Gahapi aims to utilise raw materials abundantly available in Aceh and Padang, West Sumatra, through its joint venture. To support the high-energy demand for the steel mill, Gunung Gahapi would build a 2×30 MW power plant, in addition to the USD 200M mill. The firm will seek external funds, including from a new investor, for the power plant project.