Essar to invest US$40m on capacity expansion

BEKASI, West Java (JP): PT Essar Dhananjaya, an Indonesian- Indian joint venture, will double production capacity at its steel cold rolling plant to 400,000 tons a year with a US$40 million investment, a company executive said yesterday.

The firm's president, Vijaya Raghavan, said the company, which is 90 percent owned by India's Essar Steel Ltd and 10 percent by PT Garama Adipratama, will start building new production units next Tuesday.

"The groundbreaking of the new production unit, together with the operation of the first one, will be inaugurated the by Minister of Industry and Trade Tunky Ariwibowo in a ceremony," Vijaya said.

He said the second phase, with an annual production capacity of 200,000 tons of cold rolled coils, was projected to start operating in July 1998.

The joint venture has spent $90 million building the first production unit and infrastructure on a 14.4-hectare area. Its construction started in July 1994 and was completed last June.

Vijaya said the first unit's output, which has been operating at 60 percent of maximum capacity, is sold domestically.

"We will export about 50,000 tons of our output worth around $25 million per annum as soon as the second phase starts producing," he said.

Vijaya said domestic demand for cold rolled coils rose from 1.1 million tons in 1995 to 1.13 million tons in 1996 and is projected to rise to 1.2 million tons this year.

PT Krakatau Steel supplied 850,000 tons of steel to the company and the rest was imported from India, Japan and Europe.

He said Essar Dhananjaya's products, mostly with a thickness of less than two millimeters, were used as basic materials to make furniture, drums, cookware, pipes, roof tiles and automotive vehicles.

Garama Adipratama's managing director is Airlangga Hartarto, a son of the Coordinating Minister for Production and Distribution, Hartarto.

Essar Dhananjaya employs 300 people and will recruit 200 more when the second phase becomes operational. (10)