Krakatau steel to invest $400 mln in steel project
JAKARTA, Feb 1 (Reuters) - Indonesia's PT Krakatau Steel plans to invest $400 million this year to expand its steel processing facilities to reduce imports of semi-finished steel products, the company's chief said late Thursday.
The unlisted company plans a number of projects including a blast furnace with the capacity to produce 1 million tonnes of steel slab and a mini blast furnace with production capacity of 500,000 tonnes of steel slab a year, Fazwar Bujang, the company's president director said.
"The projects aim to reduce imports of semi-finished products such as slab," said Bujang.
Krakatau Steel, Indonesia's sole producer of hot-rolled steel coil and cold-rolled steel coil, annually imports about 500,000 tonnes or 25 percent of its demand for steel slab, used in production of hot-rolled coil steel.
Aside from blast furnaces, the company plans to expand production capacity at it's hot-strip mill plant to 2.4 million tonnes of hot-rolled coil from 2 million tonnes.
Hot-rolled coil is used in construction, ship building, and oil and gas pipelines while cold-rolled coil is often used in products such as automobiles and pipelines.
Krakatau Steel produced 1.8 million tonnes of steel products in 2007 or 30 percent of total Indonesia's steel demand at 6 million tonnes.
Bujang also said Krakatau Steel has just signed an agreement to supply 70,000 tonnes of cold-rolled coil a year to PT BlueScope Steel Indonesia.
PT BlueScope Steel Indonesia, a unit of Australia's largest steel maker BlueScope Steel Ltd (BSL.AX), will use the product to produce gas stoves for a government programme to gradually replace kerosene for household consumption with LPG.
The programme aims to help reduce the high cost of subsidised fuel in the country.
Indonesia is Asia's top diesel and gasoline importer. (Reporting by Yayat Supriatna; writing by Fitri Wulandari, editing by Ed Davies and Louise Heavens)
