USSR TO BUILD STEEL PLANT IN INDONESIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62S00545A000100100012-2
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: December 12, 2016
• Document Release Date: September 16, 1998
• Sequence Number: 12
• Publication Date: June 15, 1960
• Content Type: REPORT

Approved For Release 2001/08/30 : CIA-RDP62S00545A000100100012-2
I0.2711
15 June 1960
5. US to Build Steel Plant in Indonesia
On 7-June the USM and Indonesia signed a contract for the con-
struction of a steel plant in West Java with a production capacity of
100,000 tons of steel a year. The installation will cost an estimated
$60 million dollars of which $35 million will be allocated from the $100
million Soviet credit of 1956 for equipment and construction materials.
The remaining $25 million represents local financing and gust be
generated internally. (PBIS, n f1U, 8 Jun 60, OUO)
The new mill will represent the first step in realizing Indonesia's
grandiose plans for developing a heavy industrial base. Internal
economic disorder has compounded the problem of locating satisfactory
raw arterials at sites accessible. for ,larger merchant vessels capable
of servicing. the. archipelago. In 1958 Indonesia hoped to build a.
smelter in Borneo and a rolling mill in East Java, as its initial step
toward an intergrated iron-steel-coke-fertilizer cogplex. (State,
D jaIa rta, Dsp 219, 7 Oct 58, (PTO) Although the $100 million Soviet
credit had been avilable since September, 1956, serious exploration
began only toward the end of 1959 and then only in East Java. (State,
Djakarta, Dsp 539, 22 Dec 59, uyJ.,* FBIS, FE #9, 14 Jan 60, duo)
A second Soviet-assisted plant was also projected for West Java.
By the time of the xhrushchev trip in February-March 1960, however,
the surveys in East Java were apparently discontinued in favor of
focusing the initial effort in West Java where a suitable harbor exists.
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 Approved For Release 2001/08/30 : CIA-RDP62S00545A000100100012-2
With further assistance now expected under the $250 million Soviet credit
Indoneeia'a iron and steel industry is currently envisaged as berg
spread throughout the archipelaso. Coal from the Celebes will be used
to fire blast furnaces in Borneo and. Sumatra which will process iron
ore located on these latter islands. The ingots will than be shipped
to the rolling mill in West.Java. Until the blast furnaces in Borneo
and Sumatra are constructed the West Java plant is expected to operate
on local iron ore, in large part derived from serap at present un-
recovered and rusting in the jungle. (State, Djakarta, Dsp 838, 18
Mar 60, Confid.).
The West Java steel mill project epitomizes the illusory
pretensioneandl lack of econoetc reality characteristic of Indonesia's
planners,, abetted by the Soviet fetish for heavy industrialization under
practically all circumstances. Furthermore, as Indonesia lacks the
necessary skilled technicians,, rupiah reserves, marine transport and
internal stability to complete even the West Java mill in the torasse~'
able future, the larger integrated couplex will remain a distant
dream for same. time to came.
A"?`'prav~e~f For, Release 2001/08/30 : CIA-RDP62S00545A000100100012-2
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