The International Finance Corporation has announced a loan to PT Gunung Raja Paksi Tbk (GRP), an Indonesian steel producer, to support the decarbonization of the country’s steel sector.
The funds will be used to enhance low-carbon steel production, cut greenhouse gas (GHG) emissions, and support the nation’s climate objectives.
Steel is a crucial material for infrastructure and urban development worldwide but is also a significant source of GHG emissions, contributing approximately 8% of global emissions.
As global steel demand is projected to surpass two billion tons by 2040, largely due to growth in Asia, innovative strategies are urgently needed to lower the carbon footprint of this challenging sector.
“Through this partnership with IFC, GRP will continue to set new bars for decarbonizing Asian steel production. This first-in-a-generation investment recognizes GRP’s early leadership as one of the very first, and still very few, operators of low-carbon steel mills in Asia,” said Kimin Tanoto, GRP’s Chairman of the Executive Committee.
He added, “The steel industry is critical to the prosperity of Asia and the wider world, but the science is clear, we must rapidly decarbonize as a sector to withhold and grow this prosperity for future generations. If steel companies are not willing to embrace the green transition, their assets are risk becoming stranded. Sustainability has and always will be GRP’s guide forward.”
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In addition to the loan, IFC has signed an Advisory Engagement Letter with GRP to develop and implement a decarbonization strategy aligned with international best practices.
This includes evaluating financing options for decommissioning GRP’s unused blast furnace, enhancing energy efficiency in its Electric Arc Furnace (EAF), and exploring new technologies.
IFC will also assist GRP in identifying new market opportunities and high-value steel products, reinforcing its role in Indonesia’s decarbonization efforts and supporting the country’s goal of reaching net-zero emissions by 2060.