Krakatau Steel to get $250m loan for new mill

IDX-listed steel producer PT Krakatau Steel Tbk is finalizing a $250 million loan from Paris-based trade credit insurance agency Euler Hermes to help finance the development of its new hot-strip mill, reported Thursday.

?[The loan] is at the final process now,? Krakatau president director Irvan Kamal Hakim said.

Krakatau is 80-percent controlled by the Indonesian government. Irvan said he was optimistic that construction for the new hot-strip mill can start this year and be completed by the second half of 2017.

Last July, the steelmaker signed a deal with a consortium consisting of Germany?s SMS Siemag and Krakatau Engineering, a subsidiary of Krakatau that specializes in engineering procurement and construction business, to build the mill that is estimated to cost $405.9 million.

Krakatau aims to boost its production capacity of hot-rolled coiled to 3.9 million metric tons from 2.4 million tons now.

While waiting for the completion of the hot-strip mill project, Krakatau is also going ahead with another capital-intensive and multi-year project the building of a new blast furnace that will cost $656.3 million. Work on the project began in July 2012.

?The construction progress is currently at 75 percent to 80 percent [completion],? Irvan said. ?This furnace is expected to start operating in the fourth quarter of 2015.?

The Chinese contractor MCC-Ceri and Krakatau Engineering are involved in the construction of the blast furnace.

Krakatau operates seven factories in Cilegon, Banten province. The factories include a billet steel plant, two slab steel plants, a wired-rod mill, a hot-strip mill and a cold-rolling mill. (*)