KS to build plants in Kalimantan
Saturday, April 15 2006 - 12:50 AM WIB
?The location (in the province) is still undecided. However, the company may need around $500 million for the expansion. The new plants are expected to help the company save production costs,? said Industry Minister Fahmi Idris recently, pointing out that the province was rich in iron for steel production and coal as a source of energy.
Steel produced by Krakatau Steel is more expensive than other international companies because it has to import its raw material from Brazil and Australia as well as using fuel for generating electricity for production process.
According to Fahmi, steel produced by companies in China was sold at around US$300 per metric ton, while that produced by Krakatau Steel cost some $400 per metric ton.
The government proposed South Kalimantan to the Cilegon-based Krakatau Steel as an area suitable for steel producers because of its abundant natural resources for steel as well as sufficient coal supply for fueling power plants.
Meanwhile, Krakatau Steel president director Daenul Hay said the company was now in the process of seeking a strategic partner to help finance the setting up of the plants.
?We are looking for strategic partners now to finance the project, including the World Bank,? said Daenul as quoted by Antara recently.
With the new plants, the company?s total production capacity will reach 3.5 million tons by 2008 as against 2.5 million tons currently.
The company recorded around Rp 11 trillion ($1.22 billion) in sales revenue last year, with the figure likely to remain at the same level this year due to an estimated low demand from the domestic market. (*)