Delta?s smelter remains suspended due to raw material problem

By Thomas Sembiring

PT Delta Prima Steel said that production activity at its iron smelter in Tanah Laut, South Kalimantan, remains suspended as the company continues to face difficulties in getting the require iron ores raw material.

?Production (of the smelter) remains suspended,? said Delta Director Haykel Hubeis to petromindo.com on Friday, pointing out that the company has not been able to get the iron ores raw material from local miners in terms of quality and quantity required.

Delta started operating the smelter, which produced sponge iron and direct reduction iron (DRI), in 2013, but has stopped operation since the second quarter of 2014. The smelter has an installed production capacity of 100,000 tons of DRI per year.

Haykel said that there are various reasons for the difficulties in getting raw material that meets the specifications required by the smelter. Local miners suffer lack of capital to among others acquire the necessary processing machinery, and local bylaws prevent the shipment of iron ores from other regions to the smelter in Tanah Laut. He added that the absence of credible iron ore reserves data from the government has further compounded the problem for the company in locating the raw material that meets its specifications.

Haykel did not mention the progress of the company in opening up its own iron ores mine to help ensure raw material supply for the smelter. This portal reported in March of this year that the company was in the process of getting the required IUP mining business permit and forestry permit to open up iron ore mines in South Kalimantan.

Meanwhile, Jonatan Handojo, Deputy Chairman of the Indonesian Refining and Smelting Companies Association (AP3I), estimated that at least 26 mineral smelters have stopped operation due to difficulties in getting the required raw material, a problem that has serious undermined the government?s policy to push for the development of domestic smelters and ban the export of mineral ores in a bid to generate greater value from the country?s mineral commodities.

He said that about 24 tin smelters have stopped operation as massive illegal export of tin ores to countries such as Malaysia and Thailand continues. He did not disclose the name of the 24 smelting companies.

According to AP3I data, the two others are iron smelters, each owned by Delta Prima and PT Meratus Iron Jaya & Steel, a subsidiary of IDX-listed steel maker PT Krakatau Steel Tbk. The latter company could not be immediately reached for confirmation.

Editing by Reiner Simanjuntak