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Hot stripped mill to be operational by 2019
State-owned steel maker PT Krakatau Steel is optimistic that its second hot stripped mill (HSM) will be ready in 2019
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State-owned steel maker PT Krakatau Steel is optimistic that its second hot stripped mill (HSM) will be ready in 2019.
The mill is part of its efforts to establish a steel complex with an annual output of 10 million tons in Cilegon, Banten, by 2025.
The firm’s general manager for research and technology, Yusuf Marhaban said construction was more than 25 percent complete as of this month, after the ground-breaking in August last year.
“The construction of this HSM is included in the 10 million tons cluster project, in a bid to reduce our steel import dependence and steel trade deficit. Today, we import more [steel] than we export,” he told reporters on Tuesday.
Once completed in 2019, the US$400 million mill will run at a production capacity of 1.5 million tons of steel per annum, adding to the first HSM, which is running at a capacity of 2.4 million tons per year.
To reach the 10 million ton capacity, the second HSM will then be upgraded to produce 3 million tons of steel in 2021 and the first HSM will be upgraded to produce 4 million tons of steel by 2025, making a total output of 7 million tons.
The remaining 3 million tons will come from Krakatau Steel’s subsidiary Krakatau Posco — a joint venture with South Korean steel giant Posco — which has been running since 2013 and the other 1.5 million tons from a cold rolled mill (CRM), which is planned for construction.
Previously, Krakatau Steel president director Mas Wigrantoro Roes Setyadi said the second HSM, once completed, would be operated by Krakatau Posco while the CRM would possibly be operated by a new joint venture among Krakatau Steel, Posco and Japanese’ Nippon Steel.
To curb the trade deficit in iron and steel, which reached US$4.3 billion in 2016, the government has launched stricter import inspections and safeguards to reduce steel imports.
The efforts led to a 4.2 percent reduction year on year (yoy) to 9.1 million tons in the first nine months of this year, Central Statistics Agency (BPS) data show.
“We hope that imports won’t increase with the rising international steel price,” wrote Iron and Steel Industry Association (IISIA) executive director Hidayat Triseputro in a text message on Tuesday.
He expects the domestic steel consumption to increase by around 5 percent to around 13.5 million tons this year, from 12.7 million tons last year. With the decline in imports, he hopes the market share for local iron and steel will reach 45 percent, a slight increase from 40 percent last year.
