Krakatau Steel to boost production

JAKARTA (JP): State-owned PT Krakatau Steel plans to invest US$50 million to modernize its cold rolled steel coils plant in Cilegon, West Java.

Soetoro Mangoensoewargo, the president of Krakatau Steel, said Tuesday the company would convert the five-stand tandem cold mill to a full continuous mill to increase production.

"The project is expected to raise production of cold rolled steel coils to 950,000 tons a year from 650,000 tons," he said.

The project will involve a consortium of PT Krakatau Engineering Corporation and Clecim of France and is expected to be completed in two years, he said.

The conversion is also meant to increase Krakatau's production of thin-sized cold rolled steel coils to 300,000 tons a year from 200,000 tons, he said.

"With the newly converted mill, we will be able to meet the domestic demand for iron sheet roofing, and to provide cold rolled tin mill black plate for tinplate material to PT Latinusa," he said.

PT Krakatau Steel also announced its plan to convert its fuel system from natural gas to coal, with a capacity of three million tons a year.

The plan to convert to the fuel system to coal, which will cost $1.5 billion in investment, was prompted by increasing gas prices, Soetoro said.

"The conversion will need a big investment because the mill will need a pollution control device," he said, adding that the cost of the project would be paid for with proceeds from the sale of the company's shares to the public in October.

Soetoro said his company is also studying the possibility of building electro-galvanis and hot-dip galvanis units, each with capacities over 100,000 tons, to increase production of iron- coated cold rolled steel coils.

Iron-coated cold rolled steel coils are used in car components as well as home and office items.

PT Krakatau Steel, one of the 10 companies under the government's Management Board of Strategic Industries, is one of the state firms now being prepared to go public.

Soetoro said the company's net profits decreased 47 percent to Rp 129.9 billion last year.

Production at PT Krakatau Steel, the country's largest steel manufacturer, decreased slightly to 2.1 million tons last year from 2.2 million tons in 1995.

Its sales decreased to Rp 2.14 trillion last year from Rp 2.22 trillion in 1995.

Soetoro blamed the decrease on overstocked production in China and the dumping of imported items, which have affected steel prices. (02)