Interfax China reported that Nanjing Iron & Steel Group is planning to build a 1.5 million tonne steel mill in the Indonesian province of South Kalimantan in 2008 with a total investment of roughly USD 500 million.

Mr Anshari Bukhari director general for metal, machinery and textiles at the Indonesian department of industry said that the steel mill project, designed with a capacity to produce up to 1.5 million tonnes of billet and slab could see production capacity expanded to 2 million tons in the future. He added that Nanjing Steel wanted to team up with a local hot rolled coil manufacturer, Gunung Garuda Group, to ensure supply of the basic materials.

Raw material for production including coal and iron ore will be predominantly sourced in Kalimantan and if needed, the project will also import iron ore from Australia.

Mr Jia Liangqun an analyst with Mysteel told Interfax that "A trend is developing in which Chinese steel mills are establishing steelworks overseas, as China has become a net steel exporter. Chinese steel makers are looking for opportunities in growing economies, like India, Brazil and Indonesia, where they have abundant resources and increasing demand, whereas further expansion at home is relatively limited."