The Indonesian steel producer Krakatau Steel Inc. refused to cooperate with the world largest steel maker ArcelorMittal in building steel factories in West Java and East Java provinces, Director of Karakatau Steel Fazwar Bujang said in Jakarta Monday.

    Previously, ArcellorMittal had seriously asked Krakatau Steel for cooperating on the steel production, the director said.

    "They have many times asked for meeting to discus a joint venture," he said.

    The biggest Southeast Asia economy, Indonesia has decided to privatize Krakatkau Steel in an effort to boost the production capacity.

    The country planned to conduct an initial public offering (IPO) of the shares of Krakatau Steel by up to 35 percent by the end of this year, State-Owned Enterprises Minister Sofyan Djalil said.

    Funds and new technology are needed to raise the production of the company from 2.3 to 7 million tones per year to meet the growing domestic demand.

    Currently, Indonesia imports about 6 million tons of steel a year, according to the country's investment board.

    Last year, the company posted a net profit of around 370 billion rupiah (some 40.66 million U.S. dollars). In the first quarter of 2008 alone, the figure already reached 400 billion rupiah (43.96 million U.S. dollars), according to the company.