Essar to invest US$125 million to boost steel output

India-based Essar Group will boost its steel production capacity in Indonesia this year to tap into the surging domestic demand for steel, The Jakarta Post reported on Friday.

KB Trivedi, the President Director and Chief Executive Officer (CEO) of PT Essar Indonesia, a local business unit of the group, conveyed the expansion plan during a meeting with Industry Minister MS Hidayat in Jakarta on Wednesday.

Hidayat said that Essar would make an investment amounting to US$125 million for expansion activity.

?The firm will likely realize its plan in the second quarter of this year,? he told reporters.

At present, Essar operates a cold rolled coil ( CRC ) plant in Cibitung, Bekasi, West Java, with a production capacity of 400,000 tons per year, which makes it the second-largest producer of CRC in Indonesia after state-owned steel maker Krakatau Steel.

The annual output of Essar?s plant in Cibitung, Bekasi, West Java, includes 150.000 tons of galvanized strips, used in automotive and construction, and 100,000 tons of cold rolled soft steel, used to make pipes and tubes, enamelware and furniture.

The Industry Ministry?s director general for manufacturing-based industry Panggah Susanto detailed the plan, saying that Essar would upgrade its annual production capacity of CRC to 700,000 tons.

"Our demand for CRC increases each year and this is what the firm expects to meet,? Panggah told reporters after the meeting.

Total CRC consumption in Indonesia is estimated to reach 2.4 million tons per year, according to Industry Ministry estimates.

However, overall output is only 1.63 million tons, generated by four firms: state-owned Krakatau Steel (850,000 tons), Essar Indonesia (400,000 tons), Little Giant Steel Corp. (230,000 tons) and Raja Besi (150,000 tons), leaving the remainder sourced from imports, such as from China, Japan, South Korea, Taiwan and Vietnam.(*)