JAKARTA (Reuters) – Indonesia’s Krakatau Steel and South Korea’s POSCO Holdings have signed an agreement to invest $3.5 billion starting next year to expand their production capacity in the Southeast Asian country, Indonesia’s investment ministry and POSCO said on Thursday.
The expansion will also include the production of automotive steel for electric vehicles (EVs), the Indonesian ministry said in a statement.
The signing took place in Seoul, during the last leg of a trip by Indonesian President Joko Widodo to North Asia.
The president had gone to China and Japan earlier in the week, during which his ministries announced investment pledges by companies like Japan’s Toyota Motor Corp and Sojitz Corp.
KRAKATAU POSCO, a joint venture between the companies, has invested $3.7 billion in steel production in Indonesia since 2010, Indonesia said.
POSCO is also involved in a $9.8 billion project to create an EV supply chain in Indonesia, to make use of the country’s rich nickel reserves, led by another South Korean company, LG Energy Solution (LGES).
The ministry said the latest agreement will also help facilitate Indonesia’s $32 billion project to relocate its capital from Jakarta to a new city called Nusantara on Borneo island.
Krakatau Steel did not immediately respond to a request for comment.
(Reporting by Bernadette Christina Munthe and Gayatri Suroyo in Jakarta and Joyce Lee in Seoul; Editing by Ed Davies)
