The International Finance Corporation (IFC) has announced a USD 60 mln loan to PT Gunung Raja Paksi Tbk (GRP), a leading Indonesian steel producer, to promote decarbonization in Indonesia’s steel industry. The funds will help GRP expand its low-carbon steel production using Electric Arc Furnace (EAF) technology, reducing greenhouse gas (GHG) emissions and supporting Indonesia’s climate goals, according to an IFC press release.
This financing is expected to increase GRP’s capacity to recycle scrap metals and produce high-quality steel with over 50pct lower emissions compared to the global average. It will also help reduce Indonesia’s dependence on high-carbon steel imports and meet rising steel demand.
In addition to the loan, IFC has signed an Advisory Engagement Letter with GRP to develop a decarbonization strategy, including exploring financing options for the decommissioning of the company’s unused blast furnace. The advisory will also focus on improving energy efficiency in GRP’s EAF operations and exploring new steel products and technologies.
As one of Southeast Asia’s largest steel producers, Indonesia’s steel production is expected to rise from 16 mln tons in 2023 to 33-35 mln tons by 2030, driven by growing infrastructure, housing, and automotive demands. Decarbonization is seen as key to achieving the country’s net-zero emissions target by 2060.
GRP, part of Gunung Steel Group, has a production capacity of 1.3 mln tons of flat and long steel products.
