PROFILE ON PT KRAKATAU STEEL

Krakatau Steel Group operates an integrated steel industry. Its holding company is state-owned steel maker PT Krakatau Steel (KS), which was established in 1971. It took over steel factory Trikora. KS is wholly owned by the government. It has increased its authorized capital several times. In 2003, its authorized capital was IDR 2 trillion (US$200 million).

In 35 years, here was no significant increase made in expanding its capacity. Currently KS has 35 million tons of annual production capacity. Its production still falls far short of the requirement in the country. The country’s downstream industry has to rely much on imports for steel basic materials.

At the time B.J. Habibie was Research and Technology Minister and chairman of the agency managing strategic industry including PT KS, the steel maker already planned to build an integrated upstream steel industry. However, the plan is never come to reality, because of the monetary crisis in 1998.

In 2006, PT KS has made another plan to build expansion plant for development of the pellet in South Kalimantan. South Kalimantan was chosen as the most suitable place as it has large iron ore reserves on the island of Sebuku, estimated to have deposit of 560 million tons of iron ores. So far the country still imports iron ore mainly from Brazil and Chile.

The palletizing plant will have 2 million tons annual production capacity for the beginning year. It was reported that five international companies have indicated interest in the project. They are Metallurgical China Construction (MCC) and Sino Steel from China, Essar and Ispat International from India, and Trans Asia International from Europe. The factory to cost around US$460 million is part of PT KS’s expansion program of US$ 897 million to be carried out by phases until 2010.

In utilizing the iron ore reserve, KS will cooperate with PT Sebuku Iron Leteric Ores (PT SILO) as the mining operator in the island of Sebuku and with CV Source Daya Alam which holds the mining authority in the Karang Tunggal sub-district, Tasikmalaya, West Java.

From part of its strategic plan, PT KS plan to expand its production capacity. In the first stage it will expand its capacity by 1 million tons a year in 2008 and continues the expansion program to bring its annual capacity to 10 million tons in 2013 and to 20 million tons in 2020.

Installed production capacity of PT KS in 2005.
Sponge Iron: 2.3 million ton per year (HYL I: 1 million tons; HYL III: 1.3 million tons)
Steel Slab: 1.8 million tons per year (Plant I: 1 million tons; Plant II: 800,000 tons)
Steel Billet: 675,000 tons per year
HRC: 2.5 million tons per year
CRC: 650,000 tons per year
Wire Rod: 450,000 tons per year

PT KS Subsidiaries

There is 3 subsidiary companies under PT KS, they are PT. Krakatau Wajatama (concrete reinforcing iron producer), PT KHI Pipe Industries, and PT Pelat Timah Nusantara (PT LATINUSA=Tin plate producer).

PT Karakatau Wajatama was establish in 1992 producing various types of high quality steel bars such as INP, IWF, H-Beam, U-Channel, and L-Angles, Deformed and Plain Bars and steel wire rod. This company has three production facilities – Section Mill, Bar Mill, and Cold Wire Drawing.

PT KHI Pipe Industries (PT KHI) was established in 1972, producing steel pipe. This company has an annual production capacity of 155,000 tons of spiral pipe. PT KHI is the only producer of spiral pipes in Indonesia with international recognition.

Its factory is located over a 160,000 m2 plot of land in Cilegon, producing welded spiral steel pipes with diameters from 4 to 8 inches from various types of steel with a thickness of up to 25mm. Its products include column pipes, oil and gas pipes, water pipe, and protection services.

PT LATINUSA was established in 1982 as a joint venture with PT Tambang Timah and Nusantara Ampera Bhakti. Latinusa produces tin coated thin steel plate as a basic material for can in the Cilegon Industrial Estate. Latinusa has an annual production capacity of 130,000 tons in sheet and rolls with prime quality (90%) and non prime quality (10%) that can be used for milk can or food critical, general can or non critical.


Supporting Infrastructure and Facilities

PT KS has supporting facilities separately managed such as an industrial estate under subsidiary PT Krakatau Industrial Estate Cilegon (PT KIEC), power plant under PT Krakatau Daya Listrik (PT KDL), water processing plant under PT Krakatau Tirta Industri (KTI), port facility under PT Krakatau Bandar Samudera (KBS), health care subsidiary under PT Krakatau Medika.

PT KIEC was established in 1982. KIEC was built to accommodate upstream and downstream steel and chemical industries. KIEC also has property business such as hotel, office building and sport facilities.

PT KDL was established in 1996, wholly owned by PT KS. The company operates a power plant supplying electricity to all consumers in the KIEC and surrounding areas. PT KTI produces clean water to supply consumers in the industrial estate and surrounding areas such as the public in Cilegon.

PT KBS operates the special port of Cigading in Cilegon, Banten. KBS handles loading and unloading of bulk cargoes such as iron ore, dry bulk, gypsum, sugar, soybean meal, coal, and scrap iron. With 855 m outer quay and 243 m deep quay and 75 m barge quay, it makes Cigading become one of big port in Indonesia with the deepest basin. The port could accommodate and serve 10 ships at the same time.

PT KS also has to subsidiaries operating as consultant. One is PT Krakatau Information Technology (Krakatau IT) was established in 1993. It operates as information technology service company. The second is PT Krakatau Engineering was established in 1988 operating as EPC (Engineering, Procurement, and Construction) contractor and consultant (studies, project management and industrial management).


List of Contacts

PT KRAKATAU STEEL
Address:
ADB Building
Jl. Industri No. 5, Cilegon 42435, INDONESIA
Website: http://www.krakatausteel.com/

PT KRAKATAU WAJATAMA
Address:
Wisma Baja Building, 7th Floor
Jl. Jend. Gatot Subroto Kav. 54, Slipi,
Jakarta Selatan 12950, INDONESIA

PT KHI PIPE INDUSTRIES
Address:
Wisma Baja Building, 7th Floor
Jl. Jend. Gatot Subroto Kav. 54, Slipi,
Jakarta Selatan 12950, INDONESIA
Website: http://www.khi.co.id/

PT PELAT TIMAH NUSANTARA (LATINUSA)
Address:
Jl. Letjen. S. Parman No. 7-8, Slipi,
Jakarta Barat 11480, INDONESIA
Website: http://www.latinusa.co.id/

PT KRAKATAU INDUSTRIAL ESTATE CILEGON
Address:
Wisma Baja Building, 8th Floor
Jl. Jend. Gatot Subroto Kav. 54,
Jakarta Selatan 12950, INDONESIA
Website: http://www.kiec.co.id/

PT KRAKATAU DAYA LISTRIK
Address:
Krakatau Industrial Estate Jl. Amerika I,
Cilegon 42443, Banten, INDONESIA
Website: http://www.kdl.co.id/

PT KRAKATAU BANDAR SAMUDERA
Address:
Jl. Letjen. S. Parman Km. 13, Cigading,
Cilegon 42445, INDONESIA
Website: http://www.cigadingport.com/

PT KRAKATAU INFORMATION TECHNOLOGY
Address:
Wisma Baja Building, 7th Floor
Jl. Jend. Gatot Subroto Kav. 54, Slipi,
Jakarta Selatan 12950, INDONESIA
Website: http://www.kit.co.id/

PT KRAKATAU ENGINEERING
Address:
Wisma Baja Building, 7th Floor
Jl. Jend. Gatot Subroto Kav. 54, Slipi,
Jakarta Selatan 12950, INDONESIA
Website: http://www.krakataueng.co.id/

INDONESIA METAL MINING INDUSTRY PROFILE

In 2005, nickel mining industry woke up from slump development in 2003-2004. As until now, no other investor interested in copper mining in Indonesia, the futures of copper mining will depend on the operational activities of PT Freeport and PT Newmont, which have large recoverable reserves, enough for around 20 years. As already occurred in the last 5 years, copper price is expected to continue rising as already started in 2005, related to the rising copper consumption by China. Copper production in Indonesia is expected to increase by an average annual rate of 2.0% in coming 5 years from 1.09 million tons in 2006 to 1.18 million tons in 2020.

Until now, PT Freeport Indonesia and PT Newmont Nusa Tenggara will remain the only two copper mining companies in Indonesia marked by Grasberg and Batu Hijau copper mines. Grasberg is reported as one of the largest copper mine in the world. The two companies are producing porphyry copper ore containing gold and silver.

Gold mining industry in Indonesia has actually very promising prospect with regard to the huge resources available in West, Central and East Kalimantan.

In West Kalimantan there is a village called Beringin in Singkawang Regency have 35 million tons of alluvial placer gold containing 169 mg of gold per cu.m.

In Central Kalimantan, there are a lot more villages having huge gold ore deposits, which include:

1. Village Tumbang Liling (42 million tons deposit of 280 mg of gold per cu.m)
2. Village Cempaka Buang (15 million tons deposit of 300 mg of gold per cu.m)
3. Village Tewang Tampang (24 million tons deposit of 220 mg of gold per cu.m)
4. Village Batuah (31.3 million tons deposit of 268 mg of gold per cu.m)
5. Village Baamang Tengah (30 million tons deposit of 184 mg of gold per cu.m)

All of the villages are in Waringin Timur Regency, Central Kalimantan.

In East Kalimantan, there is a village called Muara Asa recorded of having a total gold ore deposit of 300 million tons containing 400 mg of gold per cu.m.

There are many other villages having adequate amount of gold ores, including those located in Banten Province, and West Java Province. Although not as spectacular as those in Kalimantan.

Silver production fluctuated from 255.4 tons in 2000 to 238.7 tons in 2005. Silver mining in Indonesia is combining with gold mining, highly notable silver ore deposits are found in Dairi - North Sumatera, Kelapa Kampit – Belitung, and in Papua (Kucing Liar, Grasberg Deep, Big Gossan and DOM).

Nickel production in term of Ni+Co in matte produced by PT Inco increased from 55,589 tons in 2000 to 77,471 tons in 2005 with an average growth rate of 10.7% per year. PT Aneka Tambang (Antam) produced 10,111 tons of Ni in FeNi in 2000 then gradually dropped to 7,945 tons in 2010 with an annual growth rate of (-13.6%).

Tin metal is produced by PT Timah and PT Koba Tin, which increased from 47,129 tons in 2000 to 67,600 tons in 2005 with an annual growth rate of 8.1%. Tin mining prospect will still expected to be in Bangka-Belitung province, particularly in Simpang Rusa and Koba, which are in the mining areas of PT Timah and PT Koba Tin.

Bauxite production grows slowly in 2000 – 2005 due mainly to some depletion of PT Antam’s bauxite recoverable deposits. Bauxite production was 1,151 thousand tons in 2000 then fluctuated to drop to 1,082 thousand tons in 2005 with annual growth rate of (-0.7%) per year. The future of bauxite mining will be in Riau island, including Pualu Bintan (101 million tons) and Kampung Bugis (1,332 million tons), which are in PT Timah’s mining areas. There are also huge bauxite deposits in West Kalimantan with total 2,368 million tons deposits, but nothing done until now to exploit the deposit, yet. They are located in the villages of Balai Tinggi (54 million tons), Kendawang Kanan (532 million tons), Baru Lombang (198 million tons), Tanjung Batu Belati (1,146 million tons), Menyumbang (200 million tons), and Menukung village (238 million tons).

Iron sand production is produced by PT Antam at a very discouraging development, producing only 489 thousand tons in 2000 then decline to only 26 thousand tons in 2005, despite abundant recoverable reserves is available. Iron sand deposit is plentiful in South Kalimantan, especially in Batu Licin (125 million tons) and Sebuku Islands (626 million tons).

In order to decrease the dependence on raw material import, PT Krakatau Steel, the only integrated steel industry in Indonesia, plans to set up new palletizing plant in South Kalimantan. The plant will use iron ores from South Kalimantan and West Kalimantan. In the first stage, PT KS will build sponge iron plant with a production capacity of 300,000 tons per year, and will be expanded to around 4 million tons per year. Government also encourages the mining companies to support PT KS’s plant and develop the iron mining in Kalimantan.


LIST OF CONTACTS


PT. FREEPORT INDONESIA
Address:
Plaza 89 Building, 5th Floor
Jl. HR. Rasuna Said Kav. X-7 No. 6, Kuningan,
Jakarta Selatan 12940, INDONESIA
Website: http://www.ptfi.co.id/

PT. NEWMONT NUSA TENGGARA
Address:
Menara Rajawali Building, 26th Floor
Jl. Mega Kuningan Lot f 5.1,
Jakarta Selatan 12950, INDONESIA
Website: http://www.newmont.co.id/

PT. INTERNATIONAL NICKEL INDONESIA (INCO)
Address:
Plaza Bapindo Building Citibank Tower, 22nd Floor
Jl. Jend. Sudirman Kav. 54-55,
Jakarta Selatan 12190, INDONESIA
Website:

PT. ANEKA TAMBANG TBK.
Address:
Jl. Pemuda Ujung-Raya Bekasi Km. 18, Pulogadung,
Jakarta Timur 13210, INDONESIA
Website: http://www.antam.com/

PT. TIMAH TBK.
Address:
Jl. Jend. Sudirman No. 51,
Pangkal Pinang 33121
Bangka Belitung, INDONESIA
Website: http://www.timah.com/

PT. KOBA TIN
Address:
Arthaloka Building, 12th Floor
Jl. Jend. Sudirman Kav. 2,
Jakarta Pusat 10220, INDONESIA
Website: http://www.ptkoba.co.id/

PT. KRAKATAU STEEL
Address:
ADB Building
Jl. Industri No. 5, Cilegon 42435, INDONESIA
Website: http://www.krakatausteel.com/

DEVELOPMENT OF STEEL INDUSTRY IN INDONESIA

Indonesia will deficit on steel supply on 2009. Steel consumption in the next 3 years will need 11.7 million tons, instead of local steel production only 5.7 million tons.

Lack of steel supply on hot rolled coil (HRC) and cold rolled coil (CRC) is done since 2001. In 2001 local consumption was 3.25 million tons, instead of local production only 2.16 million tons. So lack of supply around 1.08 million tons was supplied by import. Lack of steel local supply, because of there is no new investment or expansion for steel mill or manufacturer since 1998.

Steel local producer only produce steel for construction supply. Meanwhile, the biggest local need of steel is for automotive industry, such as electrical galvanized and galvanic. Consumption of this kind of steel increase very significant for 32% in the year 2003-2004. This cause of national automotive industry increases their production.

To solve lack of steel supply in Indonesia, the government since April 2004, reduce steel products import duty to 0%, such as hot rolled coil/ plate (HRC/P). Because of that local demand on steel product continue to increase, in 2004 local consumption increase to 4.2 million ton from 3.18 million tons in 2003. Also in 2005 local consumption increase to 4.3 million tons.

Increasing on local consumption is not followed by local production. In 2002 local production of HRC/P reach 1.62 million tons, otherwise local production continue to decrease to 1.52 million tons in 2003 and 1.32 million tons in 2004. Local consumption of HRC/P in 2004 mostly for produces CRC (36.9%) and pipe industry (23.3%). The other is for produce steel profile (14.6%), shipbuilder (2.1%), and automotive (2.1%).