Indonesia government is encouraging investment in steel industry, as steel consumption in the country is expected to hit some 10 million tons by 2013.

Currently the domestic demand for steel products is around 7 million tons per year, which is far beyond the output capacity of 4 million tons from domestic mills. Therefore, the country needed to import some 3 million tons of steel products in 2007.

To attract domestic new investment in the steel industry, the government would impose export tax or ban the export of iron ore. Moreover, PT Krakatau Steel, a state-owned steel company has been asked to build an upstream steel plant in South Kalimantan.