Krakatau to build IDR5.92 trillion new factory

Wandrik Panca Adiguna - Bisnis.com

Jumat, 6 Mei 2011 | 04:07

JAKARTA: Indonesias largest steel producer PT Krakatau Steel Tbk (Persero) will invest IDR5.92 trillion to build steel factory with blast furnace technology capable of producing 1.2 million ton annually in Cilegon, Banten. The construction of the factory is scheduled to start in 3Q/2011 and is expected to finish in 2Q/2014. After the construction completes, the company predicts to increase profit as much as IDR245.58 billion, which will continue to IDR404.42 billion in the next year.Krakatau Management in its press release yesterday stated that the construction, apart from boosting profit, is also aimed at reducing production cost, decreasing the use of imported materials, and increasing the use of local material such as iron and coal.The construction of steel factory with blast furnace technology is one of our strategies to balance the production facilities between upstream and downstream. So in the end it will increase profit margin, the management said.The management of Krakatau explained that using the blast furnace enables reduction of production cost since it consumes less energy. It also uses less scrap, and it has flexible component of raw materials.The new factory will be equipped with some supporting plants and facilities including sintering plant, coke oven plant, iron ore material handling system, hot metal handling, and other facilities such as water system, gas and electricity.Finance Director has previously revealed that the company is seeking for loan as much as US$500 million to US$600 million as additional fund to complete the factory. Concerning this, the company considers loan from Export Credit Agency.Moreover, the steel producer will use fund from bank commercial credit. However, Sukandar said that there has been no final decision on the amount of fund from Export Credit Agency and bank commercial credit.During 1Q/2011, Krakatau was noted as one listed state company with performance below the average. Net profit fell 69.68% to IDR141.89 billion because of 4% decrease in revenue to IDR4.24 trillion. (t04/wiw)

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Penulis : Wandrik Panca Adiguna

Editor : Mursito