Breaking! Chinese and South Korean Steel Giants to Build Joint Venture Steel Plant in Indonesia!

According to a September 26 report by The Korea Economic Daily, POSCO, South Korea's largest steel manufacturer, will jointly build a stainless steel plant in Indonesia with Tsingshan Holding Group, the world's largest stainless steel producer.

This collaboration marks a strategic move by two global steel giants to position Indonesia as a core base for stainless steel production, aiming to integrate resources, technology, and market advantages to reshape the global stainless steel industry landscape.

According to informed sources, the companies plan to build a plant in the Morowali Industrial Park on Sulawesi Island with an annual capacity of 2 million metric tons, equivalent to South Korea's total stainless steel production.

Under the agreement, POSCO will acquire a 44.12% stake in PT Xinheng Metal Indonesia from Tsingshan's affiliate, PT Makmur International Investment PTE, which will retain the remaining 55.88%. The two companies will jointly manage the joint venture responsible for constructing the plant.

Construction of the new plant could begin as early as next year, with POSCO's investment expected to exceed 1 trillion won ($708.3 million).

This move follows POSCO's sale of its 1.1-million-metric-ton stainless steel plant in China to Tsingshan in July, highlighting its strategic shift to reposition Southeast Asia as a key stainless steel production hub.

The South Korean steel giant already operates an integrated steel mill, Krakatau POSCO, which commenced operations in Indonesia in 2013 with an output of 3 million metric tons.

Indonesia's relocation of its capital to Nusantara and its rapid infrastructure development are driving demand for stainless steel, which is used in building facades, industrial pipelines, and factories.

Simultaneously, Indonesia possesses the world's largest nickel reserves, a crucial raw material for stainless steel production.

Industry insiders note that the combination of rapidly growing demand and abundant supply makes Indonesia a natural choice for POSCO's global expansion.

For Zhejiang-based Tsingshan, which produces 15.39 million metric tons of stainless steel annually—nine times POSCO's domestic output—this partnership presents an opportunity to overcome long-standing quality issues that have hindered its steel sales in the U.S. and European markets.

POSCO, the world's seventh-largest steelmaker widely regarded as a global leader in stainless steel technology, is expected to help its Chinese partner build credibility and expertise.

The Indonesian joint venture is also anticipated to assist the Chinese steel producer in mitigating tariff barriers in developed markets.

Market forecasts predict the global stainless steel market will grow by 72% from 2024 to 2032, reaching $318.9 billion. With its resources, geographical advantages, and supportive policies, Indonesia is becoming a hotspot for global steel companies seeking to expand their footprint. The collaboration between Tsingshan and POSCO not only strengthens Indonesia's position in the global stainless steel supply chain but also provides a new model for deepening international cooperation between the Chinese and South Korean steel industries.