PT Gunung Raja Paksi (GRP), a member of Gunung Steel Group and one of the largest private steelmakers in Indonesia, has secured a USD32 million sustainability-linked loan from the national bank of Indonesia, Bank Negara Indonesia (BNI), making them the first steelmaker within the country to do so. The five-year bilateral credit would be used to fund GRP’s sustainability initiatives, which include the recently commissioned Light Section Mill (LSM).
The collaboration is marked with the visit to GRP site by the Director of Enterprise & Commercial Banking BNI, Muhammad Iqbal and General Manager of Enterprise Banking, Rangga Bhirawa was welcomed by Chief Financial Officer GRP, Roymond Wong and Head of Sustainability, Sheren Omega which located in West Cikarang, Bekasi on Wednesday, 28th December 2022.
Key to one of GRP’s commitments which is to meet domestic steel needs within the country, the LSM is expected to increase operational efficiency through lowering energy consumption and thereby reducing carbon emissions. This project is also part of GRP’s mission towards decarbonisation which follows their recent partnership with Indonesian Chamber of Commerce (KADIN), where the company pledged its support towards helping Indonesia achieve its goal of Net Zero by 2060.
As steel is an essential material needed in construction and industrial projects, GRP believes that the usage of steel produced via sustainable means will be an important pathway towards building an eco-friendly nation. A recent projection by PwC and Indonesian Iron & Steel Industry Association (IISIA) revealed that steel usage in Indonesia has reached 18.1 million tonnes (mt), an increase of 7.6% versus 2021. The same study also projects that the forecast for steel consumption by 2050 is 125 million tonnes, which is driven mostly by the construction sector which by itself accounts for up to 75% of steel demand.
“With the conclusion of COP27, the question now is, how do we help the private sector and industry players transition to sustainable business models? Green finance is a key area of discussion when it comes to advancing the sustainability agenda as it gives industry players the needed capabilities to implement sustainable technologies and processes in their businesses. Having the support of BNI will not only encourage sustainable methods of production, but also allow us to accelerate the rate of decarbonisation in the region,” said Roymond Wong, Chief Financial Officer at GRP.
“As one of the leaders in the private steelmaking space within Indonesia, we are conscious of the need to produce steel in a sustainable manner. Combined with this growing discernment around ESG strategies, customers and regulators are becoming more aware and educated on the need for sustainable steel. The combination of this newly secured loan and our existing ESG strategy, is aimed at ensuring that the produces steel meets green requirements towards regional development projects for Indonesia’s goals to become a greener nation,” said Sheren Omega, Head of Sustainability at GRP.
Director of Enterprise & Commercial Banking of BNI, Muhammad Iqbal said, “GRP is an industry player who is at the forefront of implementing sustainable production methods in the business”.
Furthermore, Iqbal explained that BNI as a pioneer of green banking in Indonesia hopes to continue to encourage changes towards the future of sustainable business activities and comprehensive business collaboration with GRP.
"We are very grateful for the opportunity to contribute together in realizing a green economy. In the future, BNI and GRP will also optimize the potential for financing the company's value chain, cash management, payment channels, supply chain financing, financing for partners and employee consumer products, both funds and loans, along with providing solid digital solutions for GRP”, he added.
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