Indonesian state-owned steel company PT Krakatau Steel announced an agreement late last year (2012) to build a new steel plant in partnership with Japan’s Nippon Steel and Sumitomo Metal Corporation.

The joint venture, to be called Krakatau Nippon Steel Sumikin, will produce high grade flat steel mainly for the Indonesian automotive industry which is dominated by Japanese vehicle manufacturers.

The new facility will be built in the sprawling Krakatau Industrial Estate in Cilegon, on the eastern tip of the island of Java. 

Krakatau will take a 49% stake in the new venture with Nippon Steel & Sumitomo Metal owning the remaining 51%.

Steel demand by the country’s automotive industry has grown sharply in recent years, with new vehicle sales expected to reach 1.1m units in 2012.