Itochu Corp. and Nissho Iwai Corp. said Wednesday they have agreed to integrate their steel-processing operations in Indonesia in an effort to improve production efficiency.
The firms plan to launch a new company to this end in October.
Itochu will hold an 85.1 percent stake in PT United Steel Center Indonesia, while Nissho Iwai will hold the remainder.
The new company's paid-in capital will total $3.9 million.
An Itochu affiliate, PT Indonesia Sarana Steel Center, has considerable expertise in steel processing for home appliances and office equipment, while a Nissho Iwai affiliate, PT Nicorindo Baja, mainly processes steel for cars.
Their trade has deteriorated, however, due to the Asian financial crisis and political turbulence in Indonesia.
It is believed that the integration plan will embrace both firms' business strategies and will help bolster productivity and product quality.