Posted on 03 Feb 2017
Steelmaker Krakatau Osaka Steel (KOS) has commenced operations after almost two years constructing its plant in Cilegon, Banten. The company aims to produce 200,000 tons of construction steel annually, mostly for building electricity transmission towers.
The firm is a joint venture (JV) between state firm Krakatau Steel, which is the biggest steelmaker in the country, and Japan’s Osaka Steel Co. Krakatau holds a 20 percent stake in the JV and Osaka controls the remaining 80 percent.
Both Krakatau and Osaka invested US$200 million in 2015 to build the plant with installed annual capacity of 500,000 tons of steel angles and reinforcing bars (rebars), key components in various construction projects.
“We just opened the plant yesterday and hope to see it run at 40 percent this year, producing 200,000 tons of angles and rebars,” said Osaka Steel president Junji Uchida after meeting with I Gusti Putu Suryawirawan, the Industry Ministry’s director general of metals, machinery, transportation equipment and electronic industries, recently.
Of the 200 ton production volume, 60 percent will comprise rebars and the remaining 40 percent will be in the form of steel angles. KOS is looking to channel 150,000 tons to the government’s electricity projects through parent company Krakatau Steel.
Krakatau Steel already has contracts with state electricity company Perusahaan Listrik Negara (PLN) to supply the steel required to build electricity transmission towers as part of the government’s 35,000 megawatt power plant project.
“We’ll supply PLN through Krakatau Steel,” Uchida said.
Before the products arrive at the construction site, they will be assembled first by fabricators assigned by PLN, such as publicly listed Bukaka Teknik Utama and other companies.
Meanwhile, the other 50,000 tons from the targeted 200,000 ton production volume will be channeled through private distributors for retail and projectbased purposes, ranging from bridges to toll roads.
KOS claims its rebars are of strong quality and so their usage can help reduce the pieces of steel needed in a project by 30 percent. However, the firm, which employs 150 workers, 130 of whom are locals, will still import billets as raw material.
“Krakatau Steel has not produced billets and so we will import them, mostly from Japan,” Uchida said.
Krakatau Steel corporate secretary Iip Arief Budiman said KOS had not bought raw material from the state firm as of now, but such an arrangement would be made in a contract.
Krakatau is also building a blast furnace at the moment, scheduled to operate in the first quarter of this year to produce billets and other raw steel material.
“Our current electricity furnace is not efficient for producing raw material like billets but as soon as the blast furnace work is completed, we’ll have an additional 1.2 million tons of hot liquid metal to produce various raw materials,” he said over the phone on Friday.
Iip said PLN’s electricity transmission towers would also source the required steel from Krakatau’s other subsidiary, Krakatau Wajatama.
Besides Osaka Steel, Krakatau has also established JVs with Nippon Steel in the form of Krakatau Nippon Steel and with South Korean Posco Steel in Krakatau Posco Steel.
