PT Dexin Steel Indonesia begins benchmark project expected to reach annual production of 7 million metric tons

Delong Steel Group, a Xingtai, Hebei province-based Fortune Global 500 company, is exporting its Chinese wisdom of steelmaking to the world.

Five years ago, in response to the country's Belt and Road Initiative, Delong Steel established its subsidiary — PT Dexin Steel Indonesia. Dexin Steel is the largest single steel complex in Southeast Asia.

The company was put into operation by the end of March 2020, and its factory reached design capacity three months later. Currently, its annual production capacity of crude steel is 4 million metric tons.

According to Dexin Steel, once the first phase of the expansion project is put into operation, it is estimated to produce 7 million tons of crude steel annually, with an output value of 28 billion yuan ($3.89 billion), creating a tax revenue of 1.7 billion yuan.

In the future, Dexin Steel plans to produce 20 million tons of steel and 10 million tons of coking coal annually. Data from Dexin Steel show that so far, the company has spent $4 billion on the Indonesian project.

In 2021, Dexin Steel's overseas sales revenue totaled 15.49 billion yuan, up 317.88 percent year-on-year. Its crude steel production surged 195.76 percent on a yearly basis to nearly 4 million tons.

The company has also created many employment opportunities for residents. Apart from hiring nearly 6,000 locals, it offered 10,000 jobs to the upstream, midstream and downstream industries. The added employment opportunities raised the incomes of locals and improved their living standards.

Dexin Steel continues to drive the development of related industries in Indonesia. The company owns advanced equipment, advantageous technology, management skills and talent from China, and its products are highly cost-effective. These factors have promoted the gradual elimination of non-standard steel in the Indonesian steel market, and have guided the standardized development of the market.

Bo Wenxi, chief economist at marketing firm Interpublic Group China, said: "China is taking a leading role in terms of steelmaking. Apart from a small portion of special steel, China is producing a complete range of steel, and the output is topping the world. China's steel going global is an inevitable trend."

Chen Jia, an independent researcher in international strategy, agrees: "To pursue high-quality development, China's traditional steelmaking industry should take the transformation path, and going global is a kind of transformation.

"The industrial chain of China's manufacturing industry going global is a trend, and China's steelmaking industry, as an upstream of the industrial chain, will promote the formation of a cluster effect of China's manufacturing industry chain overseas, further consolidate the foundation of China's global industrial chain layout and strengthen the supply chain security advantage."

According to the China Iron and Steel Association, in 2021, China exported 66.9 million tons of steel, up 24.6 percent year-on-year.

On Aug 16, New Tianjin Steel Group, another subsidiary of Delong Steel, inked a deal with Teda Investment Holding Co Ltd and launched a 10-million-ton steelmaking project in Saudi Arabia. Different from the project in Indonesia, the project in Saudi Arabia is adopting electric furnaces instead of blast furnaces to produce steel.

Chen said, "China has transformed from a large steelmaking country to a steelmaking power in the world, and substituting electric furnaces for blast furnaces is an inevitable trend in the industry."

"The project in Saudi Arabia also marked Delong Steel's efforts under the BRI. We want to adopt an environmentally friendly production model. This is the reason why we use electric furnaces in the country," said Ding Liguo, chairman of Delong Steel.

"The country's industrialization process requires a great amount of steel. Rising market demand made us select Saudi Arabia," he said.

Currently, Delong Steel conducts business in 27 countries and regions around the world, covering Asia, Africa, Europe and the Americas and employs over 7,400 overseas workers. In the future, it plans to expand its business to more countries and regions, aiming to share the Chinese wisdom of steelmaking with the world.

However, Ding said that despite the success achieved in Indonesia today, Delong Steel's internationalization process was not as smooth at the beginning.

The establishment of Dexin Steel experienced many difficulties. In May 2017, the pioneering construction group of seven people traveled from China to a little Indonesian island. At that time, they had to travel for 38 hours and take three different means of transportation including airplanes, ferries and vehicles to get to the industrial park.

"The rugged mountain road and the rough sea made the weaker people collapse, and it took them a few days to recover," recalled Wang Sanbo, a member of the pioneering construction group of Dexin Steel.

"On the island where the industrial park is located, our initial command center was merely a container. Sometimes it was hard for us to walk through the park. When it rains, the puddles in some places can reach half a meter deep, making the construction very difficult," Wang said.

"During the past five years, we encountered a tsunami, earthquake and COVID-19 in Indonesia, but we never gave up," Ding said.