Krakatau Steel to boost production

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)