BlueScope to expand capacity in RI

BlueScope to expand capacity in RI

Bloomberg, Jakarta

BlueScope Steel Ltd., Australia's biggest steelmaker, said it
plans to increase capacity at a steel metallic coating and
painting factory in Indonesia for a second time this year to meet
residential demand.

In March, it invested A$7.94 million (US$5.7 million) at the
plant in Cilegon, Banten province, 100 kilometers (62 miles) west
of Jakarta, to increase capacity to 55,000 tons a year from
25,000 tons.

"Being at full capacity, we're looking for ways to expand
output," Rob Crawford, the country president, said in an
interview in Jakarta. "The focus right now is on line speed, but
we're not ruling out further expansion and new facilities."

Indonesia's economy is forecast to expand at 4.8 percent this
year and 5.4 percent next year, after 4.5 percent in 2003, the
government said. Consumer spending represents three-quarters of
the country's economic activity. Investment in homes has made the
housing index a leading cause of higher inflation this year,
according to the bureau of statistics.

Demand for BlueScope products for use in homes has increased
about 10 percent this year, Crawford said. These include color-
bonded steel sheets used in roofing and trusses in place of
timber in housing, he said.

The company has been cutting back on exports to meet local
demand, Crawford said.

The factory has two lines: one to coat steel with zinc
aluminum, and a second to paint the product with a material that
makes it more resistant to heat and rain, with a reflective
capability to reduce heat transfer to the interior.

BlueScope plans to boost capacity of the coating line by 25
percent by 2007 to 125,000 tons a year. It will raise capacity of
the painting line 10 percent by increasing its speed to 70 meters
a minute "as soon as we can," Crawford said.

The company's business on the commercial and industrial side
has been "flat," Crawford said. "It does rely on foreign
investments."

Overseas investors have been restrained, as Indonesia has held
three elections this year. The last election, in 1999, was marred
by violence. This year's legislative and presidential elections,
the final one last week, passed peacefully.

"We're past the worst of it," Crawford said. "We are investing
and we keep looking for opportunities to invest."

The company has been in Indonesia for 31 years. It employs 450
workers, Crawford said. He declined to reveal its revenue or
forecasts, saying steel prices have been volatile.