Posted on 16 Mar 2012
PT Krakatau Engineering, a subsidiary of the state-owned steel firm PT Krakatau Steel (KS), plans to set up an air-separation plant in Cilegon, Banten, with a total investment of US$80 million to support its business.
KS president director Fazwar Bujang said in Jakarta on Tuesday that PT Krakatau Engineering would team up with industrial gas producer PT Samator Gas Industri to build the plant, which is scheduled to begin commercial operations by the end of 2014.
"The air-separation plant is projected to have a total capacity of 45,000 normal meters cubic per hour [nmch] and will be one of the biggest plants in Indonesia," Fazwar said after the signing of a memorandum of understanding (MoU) with PT Samator Gas Industri at the State-Owned Enterprises (SOE) Ministry.
He said that the two companies would establish a joint venture company to operate the plant and distribute the production.
At present, KS needs about 165,000 nmch of oxygen, he said, adding that Germany's Linde gas corporation was currently building an air-separation plant with a total capacity of 100,000 nmch in Cilegon to meet KS'demand.
Currently, Krakatau Steel buys 20,000 nmch of oxygen from France's Air Liquide.
Arief Harsono, the CEO and president director of Samator Group said that 40 percent of the total investment would be financed by the internal funds of both companies, and the remainders would be financed by bank loans.
"This is going to be the second biggest air-separation plant in Asia and we hope this plant will contribute a lot to both companies and Indonesia," Arief said.
SOE Minister Dahlan Iskan, who attended the signing ceremony, said that he was proud that Indonesia's largest steel maker and industrial gas producer had collaborated strongly to develop Indonesia.
Today, Krakatau Steel is the largest integrated steel producer in Southeast Asia.
The company is also a producer of hot sheet steel (HRC) and cold sheet steel (CRC), the largest in Indonesia, each with a domestic market share of 47 percent and 33 percent, and manufacturer of steel wire rods, the second-largest in Indonesia, with a 32 percent domestic market share.
In terms of product specification, Krakatau Steel controlled about 85 percent of the total product absorbed by the domestic market.
The company has a combined steel capacity of 2.45 million tons per year, importing raw materials including iron ore from countries in South America and the Middle East.
The company sells most of its products in Indonesia, especially in Jakarta and Surabaya.
Meanwhile, a fraction of its products have been exported to, among others, Australia, Japan, Malaysia, Singapore, the UK and Vietnam.
