T

he country'€™s largest steel maker PT Krakatau Steel (KS) will likely spend more money to support its expansion projects after it decided recently to increase the production capacity of its blast furnace plant.

Krakatau said it has signed a deal with contractors for the blast furnace project '€” a consortium of a group of Chinese companies Capital Engineering and Research Incorporation Limited (MCC-CERI) and KS'€™s subsidiary PT Krakatau Engineering '€” to increase the production capacity of a coke oven plant to 550,000 tons per year from previously planned 500,000 tons per year.

A coke oven plant is part of the blast furnace complex development, which will also have a sintering plant, which will process steel mill waste into useful materials, hot metal treatment plant, and other supporting facilities. The coke oven plant will process coke to fuel the blast furnace.

The increasing production capacity of the coke oven plant will make the value of engineering, procurement and construction contract for the blast furnace complex development increase by US$14 million to $542.6 million.

The company said that the increasing capacity is expected to make the company able to support itself coking coal needed for the blast furnace plant whose capacity will be increased to 1.4 million tons a year from previously planned of 1.2 million tons.

However, the company has yet to reveal how much it would spend for the expansion of the blast furnace capacity. Krakatau officials could not be reached for comment.

Krakatau has set aside $601 million in total investment for the blast furnace complex, which is being built on a 60 hectare land in the company'€™s industrial compound in Cilegon, Banten.

The blast furnace is expected to commence operation in the second half on 2015.

The blast furnace project will be financed partly by syndicated loans from domestic banks and Chinese banks backed by export credit agencies.

The company is working on several other projects with huge investment needed, including the development of integrated steel facilities by its joint venture with South Korean Pohang Iron and Steel Company (Posco), PT Krakatau Posco. The steel plant'€™s first phase of development, which needs $3 billion in investment, is scheduled to be completed this December.