Krakatau Steel to increase capacity
Krakatau Steel to increase capacity
JAKARTA (JP): State-owned PT Krakatau Steel will delay selling
its shares to the public until after next year's general
elections. In the meantime, said president Soetoro
Mangoensoewargo, it will increase its production capacity by 120
percent and diversify its products.
"We will increase our annual production capacity from 2.5
million tons of steel at present to 5.5 million tons in 1999 by
using a blast furnace," Soetoro said yesterday.
He said that the blast furnace is a non-gas process in the
upstream of Krakatau Steel's production line.
"The expansion program is part of our company's preparation to
strengthen our position as the biggest steel manufacturer in
Southeast Asia ahead of the year 2000 and to go public after the
general election next year," he said.
The state company was expected to go public later this year
but will delay its plan due to the expansion program.
Last week, Krakatau Steel signed an agreement with Pohaang
Iron and Steel Co. (Posco) of South Korea and two other companies
to establish a joint venture to produce two million tons of hot
rolled steel coils in Cilegon, West Java.
He said the joint venture, to be called PT KS Posco with a
total investment of $800 million, will start operating its
manufacturing plant in the second half of 1999.
He did not specify the amount being spent on the company's
expansion plan.
"Later next year we will start producing electrical sheets,
stainless steel and tailored blanks which saw a rise in demand on
the domestic market," he said when asked about his company's
diversification program.
Tailored blanks are steel sheets for automotive components.
He noted that his company will produce about 50,000 tons of
"non-oriented electrical steel" and 250,000 tons of stainless hot
steel coils, most of which will be exported.
He noted that the production of tailored blanks will be
adjusted to the demand from automotive plants in Indonesia and
foreign countries.
"Indonesia's domestic demand for electrical sheets is about
25,000 tons per year," he said.
Electrical sheets are used for electricity components, such as
ballast, micro- and medium-electric motors and transformers.
According to Soetoro, the demand for stainless steel has
increased sharply. Last year alone, Indonesia had to import
70,000 tons of stainless steel.
For the finishing (annealing and coating) process of
electrical sheets, Krakatau Steel will set up a joint venture
with Thyssen Stahl of Germany with an investment of $20 million.
Krakatau Steel will have a stake of 55 percent and Thyssen 45
percent in the joint venture, which is due to start operation in
the second half of 1998.
"To produce stainless cold-rolled steel coils, Krakatau Steel
will establish a joint venture with Krup Thyssen Nirosta, a
subsidiary of Thyssen," he said, adding that each of the firms
will have a stake of 50 percent.
The stainless steel joint venture will start operating later
next year with an investment of $100 million.
Krakatau Steel has also signed an agreement with Thyssen to
set up a joint venture to produce tailored blanks.
In producing tailored blanks, the joint venture will use the
cutting and joining technology of "laser welding", which is more
sophisticated than conventional tag welding.
The joint venture, which will be 51 percent owned by Thyssen
and 49 percent by Krakatau Steel, will need an investment of
about $50 million, he said.
He said that laser welding can lower the manufacturing costs
of a car and has been used to produce Audi, VW, BMW, Mercedes-
Benz and Toyota cars.
"PT Timor Putra Nasional has sent a letter of intent to
Krakatau Steel to use our products," said Soetoro.
Timor Putra has been granted a tax break by the government to
produce cars under the local brand name of Timor in cooperation
with Kia Motors of South Korea. (13)