Indonesian Chamber of Commerce (KADIN) and The Indonesian Iron and Steel Industry Association (IISIA) propose a major plan to acquire metal mining companies in Latin America or Australia, aiming to secure the national steel raw material supply.
Yukki N Hanafi, Acting Chairman of KADIN Indonesia, suggests that these two countries are the largest suppliers of steel raw materials globally. To enhance national self-sufficiency, Yukki believes that acquisition is a potent strategy.
“We also have an idea, for example, to acquire—big idea, right?—material supplies outside, like in Latin America. If we collaborate, it should work,” said Yukki, on November 6, 2023.
This proposal arises due to the current constraints in the steel raw material supply chain caused by the Russia-Ukraine conflict. Yukki emphasizes the need for collaboration among national steel industry players, both state-owned and private enterprises, with government support regarding financing through financial institutions.
In this regard, he ensures that the idea can be further developed collectively during the IISIA Business Forum 2023, attended by stakeholders in the steel industry from November 9 to 11, 2023, at ICE BSD, Tangerang.
“Because the steel industry isn’t about one or two years; it’s about 20-30 years ahead,” he stated.
Responding to this, Purwono Widodo, Chairman of IISIA and CEO of PT Krakatau Steel (Persero) Tbk, supports and sees significant potential in the plan to achieve national steel industry self-reliance.
“What’s interesting from Mr. Yukki earlier, if there’s an acquisition of mines, so mining entrepreneurs who have been profitable in coal and have idle money, what if we buy shares in Australia, in Chile? This way, it can make raw materials in Indonesia cheaper,” he explained.
Purwono notes that Indonesia has been overly reliant on importing steel raw materials from the international market, hindering production efficiency. Currently, the production utility of steel is still low, at 54%.
Meanwhile, the national steel industry is expected to grow annually. IISIA projects that the national steel demand in 2045 will reach 100 million tons, with an estimated investment value of US$100 billion.
