GRP and the Quest for Green Steel

Set in May 2025, this case features PT Gunung Raja Paksi Tbk (GRP), a mid-sized, family-owned Indonesian steel producer facing existential competitive pressure from Chinese steelmakers who produce steel at costs roughly 10% below GRP's own. Executive Chairman Kimin Tanoto and Chief Transformation Officer Kelvin Fu have responded by launching Project Green Dragon - an $800 million initiative to transform GRP into Southeast Asia's first mover in low-carbon, automotive-grade steel. The transformation rests on three pillars: replacing GRP's blast furnace with electric arc furnace (EAF) technology; adopting the Arvedi endless strip production (ESP) process to make ultra-thin hot-rolled coils; and targeting the European automotive sector as the premium market for green steel. Simultaneously, GRP has divested its structural steel division ("Project Gaia") for $450 million, funding part of the transition and signaling strategic commitment. To signal irreversible commitment to the green strategy, Tanoto plans a public demolition ceremony for GRP's blast furnace, attaching explosives and handing detonators to key stakeholders. The case ends with GRP at an inflection point: Tanoto and Fu must still raise $600 million in financing, family shareholders remain skeptical about the direction of the company, the ecosystem for producing green steel in Southeast Asia is underdeveloped, and customers' willingness to pay a premium for green steel has not yet been proven. After the events described in the case, GRP stopped moving forward with Project Green Dragon and re-invested in blast furnaces, while Fu and Tanoto stepped down from their roles. The proposed teaching plan includes an analysis of the potential explanations for GRP's strategy reversal and promotes a discussion about the reasons why firms struggle to execute a climate transition.