JAKARTA: PT Indoferro, a company that processes iron ore, received a US$65 million loan to complete a blast furnace plant, that is expected to start operating by end of this year.The construction of the plant that started in early 2008 in Cilegon, Banten province, requires a total US$130 million.Eximbank Managing Director Dwi Wahyudi said the loan facility is on a 5-year tenor with an interest rate below 6% a year.The loan facility uses interest during construction (IDC) scheme, where a debtor pays only the loan interest during the term of the construction, while the loan principal repayment will only start after the construction. We expect the IDC will last not more than a year, Dwi said after signing the loan agreement with Indoferro in Cilegon yesterday.Eximbank President I Made Gde Erata said that the financial institution gave the loan facility to Indoferro because it is the first company processing iron ore into pig iron, which is raw material in the steel industry.Companies like Indoferro will reduce the exports of raw commodities, including iron ore. Therefore Indonesia can have higher added value in its mining export products.Indoferro is a company that processes pig iron or nickel pig iron. In its operation, it converts iron ore and nickel ore into intermediate goods, including concrete steel, angle iron, steel plates and stainless steel.There has been no company producing pig iron in Indonesia, according to data from Ministry of Industry and Indonesian Iron and Steel Industry Association (IISA)Data from the ministry shows that iron stone and coking coal imported in the form of iron ore reached 320,000 ton in 2009.Using iron pellets as raw material, Indonesia can produce sponge iron at 2.87 million tons a year. However, there has been no company processing raw material in the form of iron pellets.Provided a ratio of 1.6:1 is applied to make sponge iron, it needs 4.6 million tons of iron pellets a year, entirely imported from Brazil. In the meantime, Indonesia imported 136.8 million tons of coke in 2008.Indoferro expects the new plant will start running at end of the year, Presiden Director Radius Suhendra. Gradually, the capacity of the plant will be increased and it is expected to produce optimally in the second half of 2012.So in the second half [of 2012] it can reach maximum production of 500,000 a year.Half of production from Indoferro will be distributed to domestic steel companies, including PT Krakatau Steel and Master Steel. The remaining 50% will be exported to the Southeastern countries, including Malaysia, the Philippines and Thailand, Radius said. (20) (t04/msw)

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