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Indonesian steel mill to tie up with Germany’s Siemag for new mill

Publication Date : 10-07-2014


Indonesia’s biggest steel maker, PT Krakatau Steel (KS), will team up with German firm Siemag AG to build a hot strip mill this year, in a bid to tap further into the rapidly growing domestic steel market.

KS corporate secretary Iip Arief Budiman said Tuesday that the construction of the new plant, to be located at the Krakatau Industrial Estate Cilegon, Banten, was expected to be finished by 2017. It was slated to produce 1.5 million tons of hot-rolled coil (HRC) each year.

“We will sell the output to the domestic market as the demand for HRC is growing,” he said.

The new project is seen expanding KS’ hot strip mill capacity by more than 60 per cent to 3.9 million tonnes, from 2.4 million tonnes at present.

The construction will be financed by the US$105.6 million raised via KS’ 2010 initial public offering (IPO).

KS signed the contract to construct the plant with a consortium comprising Siemag AG and its engineering subsidiary, PT Krakatau Engineering, on July 4.

Apart from the planned hot strip mill, KS is also working on several expansion projects, including a blast furnace, port upgrade and a power plant. The company has set aside a total of $508 million to finance the projects.

Separately, KS president director Irvan Kamal said on Monday that it had made progress with its blast furnace project, completing half of the overall planned construction.

The blast furnace, to be built with an investment of more than $500 million, is designed to produce 1.25 million tonnes of hot metal, which will serve as intermediary materials to make a variety of finished steel products.

KS, traded at the Indonesia Stock Exchange (IDX) under the code KRAS, has a long-term target to double its output to 7.15 million tonnes of steel annually by 2018.

As part of its efforts to meet that goal, the company is also partnering with other firms, particularly foreign firms.


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