After beginning operations in May, the new strip mill was inaugurated by President Joko “Jokowi” Widodo in Banten on Tuesday. Krakatau Steel launched its first hot strip mill in 1983 under then-president Soeharto.

Krakatau Steel president director Silmy Karim, speaking on Tuesday, said the new steel mill, which cost US$521 million, had an annual production capacity of 1.5 million tons of hot rolled coil (HRC) steel.

Most of the output is intended for the domestic automotive industry.

“We believe national steel consumption will continue growing in line with domestic infrastructure, industry and economic development,” he said.

He added that, with the second steel mill operational, the company's HRC output was 3.9 million tons a year, which compared with domestic demand between 4.8 million and 5.3 million tons annually.

The company commanded a 38.29 percent market share in the domestic HRC market last year, up from 29 percent in the preceding year, according to its annual report.

The second steel mill is also part of Krakatau Steel’s efforts to establish a steel complex with an annual output of 10 million tons in Cilegon, Banten, by 2025 to meet domestic steel demand and cut imports.

Krakatau Steel plans to expand its first and second steel mills and build a new cold rolled mill, in partnership with South Korean steel giant Posco, to meet the 10 million ton output target.

The steelmaker broke ground on the second hot steel mill in 2016, with plans to have it operational by the first half of 2019, but faced delays, including from the COVID-19 pandemic, such that it was only completed this year.

“We consume a lot of steel. Since that consumption is big, do not fill [the gap] with foreign products,” remarked President Jokowi on Tuesday.

Indonesia booked $666.05 million worth of net imports in iron and steel in July, according to Statistics Indonesia.

Meanwhile, PT Krakatau Steel has established a second subholding to improve its efficiency and competitiveness in the construction supplies segment.

Established on Aug. 31, Krakatau Baja Konstruksi will manage four of the steelmaker’s subsidiaries: PT Krakatau Wajatama, PT KHI Pipe Industries, PT Krakatau National Resources and PT Krakatau Niaga Indonesia.

Silmy said on Sept. 13 that the subholding, which specializes in steel supplies, was expected to optimize the company’s performance in several ways, including implementing efficiency measures, refining the business model and strengthening its market share in the downstream segment.

“The [establishment of] Krakatau Baja Konstruksi will contribute positively to Krakatau Steel’s performance,” he said.

Krakatau Baja Konstruksi has several production facilities with an annual production capacity of 300,000 tons of reinforced steel and steel profiles, 500,000 tons of wire rod and around 230,000 tons of steel pipes.

Krakatau Steel established its first subholding, Krakatau Sarana Infrastruktur, in June. The unit specializes in integrated industrial estate services with four main areas, including energy supply, industrial water supply and seaports.

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