Posted on 15 Mar 2016
Krakatau Steel proceeds with projects amid difficulties
State-run steelmaker PT Krakatau Steel (KS) aims to kick off
the construction of a hot strip mill this month and to finish a blast furnace
by September even as the company is experiencing financial difficulties, its
top official said.
“We have to keep our business growing, although it’s
difficult,” said KS president director Sukandar over the telephone on Sunday.
KS, the country’s largest steel producer, was scheduled to
start constructing its second hot strip mill by the end of this month. The
company also aimed to complete the construction of its blast furnace by the end
of September this year, Sukandar said.
The blast furnace, built with an investment of more than
US$500 million, is designed to produce 1.25 million tons of hot metal, which
will serve as intermediary materials to make a variety of finished steel
products.
The second hot strip mill project in Cilegon, Banten, which
needed an investment of about $400 million, would have an approximate capacity
of 1.5 million tons once it started operation in 2018.
KS corporate secretary Iip Arief Budiman said previously the
company aimed for its hot rolled coil production to amount to 3.9 million tons
by the time the new factory starts operating. The figure is more than double
the firm’s current hot rolled coil output of 1.5 million tons.
Sukandar said the funds for the plant expansion would come
from KS’s equity and bank loans.
“As much as $100 million is already available from our
equity to be allocated to the projects,” he said, adding that a loan facility
from Frankfurt-based Commerzbank AG would also help funding the expansion.
KS raised around $105.6 million in its 2010 initial public
offering (IPO).
The company also signed a $260.05 million loan facility with
Commerzbank AG with support from the German Export Credit Agency (ECA) in May
last year for the second hot strip mill project.
“The amount should be more than enough,” Sukandar said.
According to a financial report filed with the Indonesia
Stock Exchange (IDX) by the company on Friday, the firm saw its revenues
retreat by 29.41 percent year-on-year (yoy) to $1.32 billion last year.
Sukandar explained that the further loss booked by his firm
was caused by various factors, included lower sales, losses of its affiliated
companies, lower steel prices and KS’s obligation to absorb steel produced by
its affiliates worth around $112.4 million.
“At the same time, steel market weakened,” he said, adding
that a sluggish economy last year made several companies postpone expansion plans
that required steel.
However, an assets revaluation carried out by the firm
successfully strengthened its books. KS recorded $1.24 million in surplus on
land and the blast furnace project, making its net fixed assets value soar by
114.97 percent to $2.36 million last year.
The firm’s total assets stood at $3.7 billion last year,
higher by 42.31 percent yoy.
Sukandar expressed hope that the dynamic steel market would
get better this year.
“The goal is to maximize our production, build synergy with
fellow state-owned enterprises and benefit from the government’s infrastructure
projects,” he said.
State-run
steelmaker PT Krakatau Steel (KS) aims to kick off the construction of a
hot strip mill this month and to finish a blast furnace by September
even as the company is experiencing financial difficulties, its top
official said.
“We have to keep our business growing, although
it’s difficult,” said KS president director Sukandar over the telephone
on Sunday.
KS, the country’s largest steel producer, was
scheduled to start constructing its second hot strip mill by the end of
this month. The company also aimed to complete the construction of its
blast furnace by the end of September this year, Sukandar said.
The
blast furnace, built with an investment of more than US$500 million, is
designed to produce 1.25 million tons of hot metal, which will serve as
intermediary materials to make a variety of finished steel products.
The
second hot strip mill project in Cilegon, Banten, which needed an
investment of about $400 million, would have an approximate capacity of
1.5 million tons once it started operation in 2018.
KS corporate
secretary Iip Arief Budiman said previously the company aimed for its
hot rolled coil production to amount to 3.9 million tons by the time the
new factory starts operating. The figure is more than double the firm’s
current hot rolled coil output of 1.5 million tons.
Sukandar said the funds for the plant expansion would come from KS’s equity and bank loans.
“As
much as $100 million is already available from our equity to be
allocated to the projects,” he said, adding that a loan facility from
Frankfurt-based Commerzbank AG would also help funding the expansion.
KS raised around $105.6 million in its 2010 initial public offering (IPO).
The
company also signed a $260.05 million loan facility with Commerzbank AG
with support from the German Export Credit Agency (ECA) in May last
year for the second hot strip mill project.
“The amount should be more than enough,” Sukandar said.
According
to a financial report filed with the Indonesia Stock Exchange (IDX) by
the company on Friday, the firm saw its revenues retreat by 29.41
percent year-on-year (yoy) to $1.32 billion last year.
Sukandar
explained that the further loss booked by his firm was caused by various
factors, included lower sales, losses of its affiliated companies,
lower steel prices and KS’s obligation to absorb steel produced by its
affiliates worth around $112.4 million.
“At the same time, steel
market weakened,” he said, adding that a sluggish economy last year
made several companies postpone expansion plans that required steel.
However,
an assets revaluation carried out by the firm successfully strengthened
its books. KS recorded $1.24 million in surplus on land and the blast
furnace project, making its net fixed assets value soar by 114.97
percent to $2.36 million last year.
The firm’s total assets stood at $3.7 billion last year, higher by 42.31 percent yoy.
Sukandar expressed hope that the dynamic steel market would get better this year.
“The
goal is to maximize our production, build synergy with fellow
state-owned enterprises and benefit from the government’s infrastructure
projects,” he said. - See more at:
http://www.thejakartapost.com/news/2016/03/14/krakatau-steel-proceeds-with-projects-amid-difficulties.html#sthash.E5aURzSr.dpuf
