Indonesian steel firm to rope in Essar

Indonesian state-run Krakatau Steel is considering a strategic alliance with four global steel companies including Essar and Ispat to improve its performance, particularly in supplying iron ore.

Krakatau Steel President Director Daenulhay was quoted by Indonesia's state news agency Antara as saying that his company would explore the possibility of developing a strategic alliance with four companies "" Essar International, Bao Steel, Ispat and Nanjing Iron Steel Company next year ahead of its IPO in 2009.

"The alliance is also aimed at raising the corporate value," he said and pointed out that it was also needed to meet the company's production target of 20 million tonnes in 2020 from the current 2 mt a year.

However, an Ispat Industries spokesman said there was no such possibility and that the company had no such plans.

An Essar Steel spokesman said: "Essar keeps on looking for opportunities in whatever sectors we are. However, it is too premature for us to comment anything on this matter."

Daenulhay said the strategic alliance was also needed to secure raw materials supply, which had been increasing, and once it fructified the alliance would complete construction of an iron manufacturing plant with a capacity of 8.2 mt.

He also hoped that the government would impose an export levy on iron ore to reduce exports of the raw material, the news agency reported and quoted him as saying: "The policy must be implemented next year to assure domestic raw material supply."