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.