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Representatives from the Chinese steelmaker, including ceo Deng Qilin, met the Southeast Asian country’s industry minister Mohamad Suleman Hidayat on Wednesday March 19 to “discuss the construction of an integrated steel plant”, according to the ministry.

Franky Oesman Widjaja, ceo of Indonesia’s palm oil giant Sinar Mas Group, was also present in the meeting, according to the ministry’s website.

Several Indonesian newspapers quoted Hidayat as saying Wisco could invest as much as $5 billion in the project, which would be developed through a joint venture with Sinar Mas.

Wisco has reportedly conducted studies for the project and is now assessing a location in Indonesia, Hidayat said after the meeting.

“They are seeking a location that is close to a seaport with a specific depth, sufficient electricity supply and supporting infrastructure,” Hidayat told the Jakarta Post.

Hidayat said the ministry recommended East Java as a potential site for the mill, which could have the capacity to produce up to 5 million tpy of steel.

However, Wisco refused to confirm the news when contacted by Steel First on Thursday March 20, and Sinar Mas also refused to comment on the matter.

No prior knowledge
The Indonesian Iron & Steel Industry Assn (IISIA) said it had no prior knowledge about Sinar Mas entering into a joint venture with Wisco.

“I saw the news [about the potential joint venture] in Kompas today,” Hidayat Triseputro, executive director of IISIA, told Steel First. Kompas is a widely read newspaper in Indonesia.

It is not known where and when Wisco and Sinar Mas would build the integrated mill, Triseputro said.

Formed in 1962, Sinar Mas Group’s main businesses are in agriculture, pulp & paper, property and finance.

Indonesia has the potential to boost its steel consumption, which is still very low at present, Triseputro told Steel First.

The country has experienced rapid growth in steel demand and is the fastest growing market in the Asean region, according to the Organisation for Economic Co-operation & Development (OECD).

In 2012, apparent steel use reached a new high level of 12.5 milion tonnes, with construction being the largest driver of steel consumption in Indonesia.

The automotive industry is also playing an important role, the OECD said.

Sinar Mas probably wants to tap into this future demand since the prospects are quite good, Trisaputero added.

In January, China’s Nanjing Iron & Steel (Nangang) announced plans to build a 1 million-tpy steel plant in Indonesia in a joint venture with local steelmaker Gunung Steel Group.