Indian steel giants Tata and Essar along with Lakshmi Mittal-led ArcelorMittal have been ruled out of the race to acquire a stake in Indonesia's state-owned Krakatau Steel.
Apart from these three companies, Australia's Bluescope had also expressed interest in buying a share in the Indonesian firm.
"Indonesia has ruled out the sale of a stake in state- owned Krakatau Steel, dashing the hopes of foreign investors, including Australia's Bluescope Steel," the Financial Times said.
Quoting Indonesia's state enterprises minister Sofyan Djalil, the report said, a "strategic sale is not an option any more".
The objective of expanding capacity to 5 million tons could be achieved with an initial public offering. Parliament is expected to approve a partial float by the end of next month, it added.
"Twenty per cent of the company could be sold to the public over time, starting with an initial sale of only 5 per cent, although no final decision has been made. Krakatau Steel produces 2.5 million tonnes annually and is valued at about 1.2 billion dollars," Financial Times said in an article published in its online edition.
However, the report noted that foreign investors could yet have a chance to get into Indonesia's underdeveloped steel market.
Tata, Essar, ArcelorMittal and Bluescope have all expressed interest in building a new 3-billion dollar steel plant from scratch, the newspaper said quoting Indonesia's Investment Review Board's Chairman Muh-ammad Lutfi.