Erick Thohir Says Krakatau Steel Will Be Bankrupt, Deputy Chair Of Commission VI DPR Aria Bima: I'm Surprised, There Will Be Many Negative Impacts

Minister of SOEs, Erick Thohir. (Photo: Doc. Antara)

JAKARTA - PT Krakatau Steel is said to be likely to go bankrupt in the near future. Bankruptcy could occur if the restructuring steps taken by the Ministry of SOEs to resolve the issue of the issuer coded as KRAS failed to produce results. This was revealed by the Minister of SOEs, Erick Thohir.

In response to this, Deputy Chairman of Commission VI Aria Bima admitted that he was surprised by Erick Thohir's statement. According to him, KRAS still has hope for positive growth.

Furthermore, Aria also asked the state bank association (Himbara) to think long if they wanted to bankrupt this state-owned steel company.

"The statement by the SOE minister that PT Krakatau Steel will go bankrupt at the end of this year has gone viral and has warmed the situation. It must be handled carefully, I am also surprised. Himbara Bank must think long about bankrupting Krakatau Steel, which still has hope, it is still positive," he said in a virtual discussion, Monday, December 13.

Aria said that there would be more negative impacts if KRAS was raised than positive impacts. Even so, Aria did not explain in more detail what the negative impacts were.

"Because there will be many negative impacts compared to positive impacts if Krakatau Steel suddenly goes bankrupt, the cost is very expensive," he said.

Krakatau Steel is in danger of going bankrupt

Previously, Erick revealed that Krakatau Steel might go bankrupt in the near future. Bankruptcy could occur if the restructuring steps taken by the Ministry of SOEs to resolve the KRAS problem fail to produce results.

"For Krakatau Steel, there are indeed three steps, the problem is that the third step is stalled. Then there were negotiations with Posco, which haven't happened yet. But indeed the one that is currently crucial. If the second failed, the first failed, then this December (KRAS) could default, " he said in a working meeting with Commission VI, Thursday, December 2.

Erick said that one of the most difficult aspects of the restructuring of KRAS was renegotiating with Posco.

"So far, Krakatau Steel has partnered with Posco. Posco is the majority of us in the minority. Now we are trying to be 50:50, until now there has been no answer from Posco, it's also called a business," he said.

The root cause of the problems at KRAS

The root cause of the problems at KRAS is the stalled blast furnace project worth US$850 million. The stalled project made KRAS's debt to reach 2 billion US dollars.

Since 2019, KRAS has been restructuring its debt worth US$2.2 billion or equivalent to Rp31 trillion. The past debt is allegedly due to acts of corruption.

"Krakatau Steel has a debt of US$2 billion. One of them is an investment of US$850 million, which is not good, there must be indications of corruption," he said during the online discussion 'Bangkit Bareng', Tuesday, September 28.

Erick said that the Ministry of SOEs would also investigate the alleged crime. Erick said law enforcement for wrong businesses must be corrected.

"And we will pursue anyone who causes harm. Because this is back, it's not that we want to blame, but law enforcement on business processes that we have corrected," he said.

Efforts to save Krakatau Steel

Erick Thohir said that there were several stages of rescuing PT Krakatau Steel (Persero) from jumbo debt bondage. One of them is negotiating with a steel producer from South Korea, Pohang Iron and Steel Company (Posco).

This statement was conveyed by Erick Thohir after meeting with Posco's President Director of Krakatau Kim Kwang Moo and discussing plans for deeper cooperation with Posco at the Ministry of SOEs office, Jakarta, Friday, December 10, 2021.

"Today I discussed with Posco where I wanted to learn about the beneficial cooperation between the two countries to build an ecosystem rather than national steel. Moreover, we know that we have a large market and we are improving our supply chain," he said in a video conference. , Friday, December 10.

Furthermore, Erick said that the discussion was very positive on how Indonesia and South Korea moved forward to create mutually beneficial cooperation. According to Erick, Posco has an interest in investing in the electric car industry sector.

“This is something we really want to do to create better stake data for Indonesia,” he said.