Aus Asia signs MOU with Krakatau Steel

By Romel S. Gurky

ASX-listed Aus Asia Minerals Limited (Aus Asia) announced on Thursday that its subsidiary PT Mineral Sukses Makmur (PTMSM) had executed a Memorandum of Understanding (MOU) with PT Krakatau National Resources (Krakatau), a subsidiary of Krakatau Steel Tbk.

The company stated in its press release that the MOU is for an initial period of 12 months with the option to extend further. Based on the agreement, both companies will work together on the sale and marketing of iron ore, and to establish joint venture operations aimed at developing productive mines.

Under the MOU, PT MSM will deliver 300,000 MT of iron ore from its mine in Solok, West Sumatra and deliver it to the Krakatoa Steel Mill in Cilegon, West Java, by barge from Teluk Bayur Port near Padang, West Sumatra.

Krakatau Steel is the largest domestic steel maker in Indonesia. It is listed on the Jakarta Stock Exchange with a market capitalisation of US$ 500 million and revenues of US$ 2 billion. It has foundations which date back to the 1970?s but in recent times has a Joint Venture with South Korean Steel Maker POSCO.

Krakatau Steel has a 30 percent interest in the joint venture. Under that joint venture, an integrated steel mill with a blast furnace technology was constructed and completed in 3 years. It has started production since 2014.

Krakatau Steel?s production capacity is 3 million metric tons per year.

PT MSM is currently finalising the delivery contract with Krakatau and is expecting to ship its maiden delivery within the next 90 days.

?This is a significant milestone, allowing us to sell to one of Indonesia?s biggest domestic buyers thereby reducing shipping and export risk. Additionally, it allows us to receive a premium to market and achieve a healthy margin, at a time when we are seeking to reduce our operating costs,? Executive Chairman Robert Swarbrick said.

Editing by Benget Besalicto ST