Crashing Imported Steel, Krakatau Steel Builds Factory Of IDR 7.5 Trillion To Support The Automotive And Infrastructure Industry

Stacks of rolled steel can be seen in one of Krakatau Steel's production facilities (Photo: Doc. Krakatau Steel)

JAKARTA - The government through the Ministry of Industry supports the strategic steps of PT Krakatau Steel Tbk. in expanding production facilities by building a new factory valued at $ 521 million or equivalent to IDR 7.5 trillion (exchange rate IDR 14,417).

Minister of Industry Agus Gumiwang Kartasasmita said this effort is one of the strategies in pursuing the target of substitution of 35 percent steel imports by 2022.

"The government hopes that this production will get the national steel market, especially for the automotive supply chain and national infrastructure development", he said in an official statement, Thursday, March 25, while visiting the Krakatau Steel factory in Cilegon.

The Minister of Industry added, with the construction of the Krakatau Steel Strip Mill #2 (HSM 2) facility, it is projected that the state-owned company will increase steel production by up to 3.9 million tons per year.

He also believes that the expansion shown by Krakatau Steel can maintain public and investor confidence in the proud Indonesian steel company.

"We are sure that Krakatau Steel can develop and run its business with full credibility so that the government provides support in the form of protection to this company", he said.

On the same occasion, President Director of Krakatau Steel Silmy Karim said that the main product of HSM 2 is steel products with high-quality specifications.

He noted that the existing production of HSM Krakatau Steel currently reaches 2.4 million tons. This means that with the addition of 1.5 million tons from the HSM 2 factory, the capacity will be 3.9 million tons per year.

"We can contribute to the local market by 65 percent", he said.

For information, this year the government projects the basic metal industry sector to grow up to 3.54 percent.

This optimism shows that the steel industry is a high resilience industry that can survive the pandemic and is ready to improve its capabilities and performance again this year.

The plan is that the inauguration of the Krakatau Steel #2 (HSM 2) Strip Mill facility will be carried out directly by President Joko Widodo in the third week of April.