Steel demand may reach 40 million tons by 2020
CILEGON, West Java (JP): Steel demand in Indonesia is growing by 7.3 percent per annum and by year 2020 is likely to reach over 40 million tons per annum, Minister of Industry Tunky Ariwobowo said yesterday.
Tunky noted that the highest demand for steel will remain focused on rolled coil products, either hot rolled coils or cold rolled coils, the demand of which in the year 2020 will likely reach some 25 million tons.
Last year, the total demand for rolled coils in Indonesia stood at 3.7 million tons, most of which was satisfied by state- owned PT Krakatau Steel.
In addition to rolled coils, Krakatau Steel currently produces wire rods. The company can produce 1.8 million to two million tons of hot rolled coils, 650,000 tons of cold rolled coils and 250,000 tons of wire rods per annum.
Tunky, who used to preside at Krakatau Steel, said the company will soon further expand its production facilities in Cilegon to reach an annual production capacity of four million tons of steel.
He added that the government would welcome the participation of the private sector in the steel industry to meet the growing demand in coming years.
Joint venture
"To reach a level of an industrialized country, Indonesia has to develop its steel industry, in addition to the petrochemical industry, as the two have proven to be the main determinants for the success of industrialization in other countries," Tunky said when inaugurating the operation of joint-venture steel company PT BHP Steel Indonesia here yesterday.
The venture company is 65 percent owned by Broken Hill Proprietary (BHP) Company Ltd. of Australia, 10 percent by Krakatau Steel's pension fund Purna Sentana Baja, 10 percent by Krakatau Industrial Estate, nine percent by Cilegon Cahaya Steel and six percent by the central bank's pension fund Yayasan Kesejahteraan Karyawan BI.
The company's coated steel sheeting plant in Cilegon, which was established with an investment of US$55 million, has an annual production capacity of 100,000 tons of metallic coating and 25,000 tons of paint. The paint line began operating late last year and the metallic coating operation started early this year.
Hardy Papson, president of BHP Steel Indonesia, said the government licensed the company with an export right of up to 10 percent of its total products. Currently, the company has exported a small portion of its output -- some two percent -- to India, Malaysia and Singapore.
Coated steel
Meanwhile, Ron McNeilly, an executive of BHP Ltd., said Indonesia imported coated steel sheeting products from his company in Australia worth some US$30 million per annum until the operation of its coated steel factory in Indonesia.
McNeilly said BHP's coated steel factory in Indonesia is thus far the company's largest investment in Asia. If the business is good here, he said, the company plans to expand its coated steel production facilities in Cilegon.
BHP Ltd. is Australia's largest company and a leading global resource company with operations in over 50 countries worldwide and total assets of over A$30 billion (US23 billion).
In addition to the steel business, BHP also operates in various areas, including minerals and petroleum, power generation, transportation and information technology. (rid)