0 Krakatau Steel to Invest Rp 6.5 Trillion

Krakatau Steel, Southeast Asia’s biggest steel maker, plans to spend Rp 6.5 trillion ($674 million) in capital expenditure this year. This year’s investment will be lower than the Rp 13 trillion it set aside for last year. Irvan K. Hakim, president director of Krakatau Steel, said in Jakarta on Wednesday that the company would focus on building existing projects. Among the projects the company is working on is the completion of its plan to revitalize its slab steel plant which is expected to produce 2.1 million tons per year. 

The company is also focusing on its $6 billion integrated plant, a joint venture project with South Korea’s Posco, the world’s third-largest steel producer. Irvan said that the company needs $3 billion in funds for its first stage investment. “The project is still in the construction stage and hopefully it will be in full operation this year,” Irvan said. Krakatau Posco is a joint venture between Krakatau Steel and Posco. According to its website, the construction of the plant began in July 2011, and it is expected to start production in 2014. 

Irvan did not disclose the reduction in the company’s capital spending this year. Irvan also said that the company was developing other new projects. The company has signed an agreement with a Japanese firm, Osaka Steel, to create a joint venture called Krakatau Osaka Steel. That enterprise will produce steel for the infrastructure and construction sectors. Krakatau will own 49 percent of the joint venture and Osaka Steel will control 51 percent. The factory will also be located in Krakatau Industrial Estate, Cilegon. 

Osaka Steel Corporation is a subsidiary of Nippon Steel & Sumitomo Metal Corporation that makes steel products including billet, rebar and section. The two companies are seeking to tap growing demand for high-grade automotive flat steel products that are presently supplied largely by Japanese automakers Krakatau Steel has six production plants producing various kinds of downstream products from upstream raw materials. Shares of Krakatau closed unchanged at Rp 650 on the Indonesia Stock Exchange (IDX) on Thursday, compared with the 0.3 percent decline in the main stock index in the local bourse.

source : the jakarta globe