Indonesia: Krakatau Nippon Steel Sumikin Inaugurates New Plant

PT Krakatau Nippon Steel Sumikin (KNSS), a joint venture between Nippon Steel & Sumitomo Metal Corporation and state-owned steel firm PT Krakatau Steel Tbk (KRAS), inaugurated its galvanizing, annealing and processing line (GAPL) plant in Cilegon, Banten, western Java, today, Tuesday, August 7, Kontan reported.

KNSS has operated since July 2017 with production capacity of 480,000 mt annually, said Djoko Muljono, the company’s director as quoted by Kontan. KRAS has 20% stake in KNSS, while Nippon Steel and Sumitomo hold 80% stake. The plant produces cold-rolled annealed steel, hot-dip galvanized steel and galvanealed.

PT Krakatau Steel hopes the operation of KNSS can substitute imported products for automotive industry.

“We hope Japanese automotive industry, which has been operating in Indonesia for decades, will be willing to use KNSS products,” Mas Wigrantoro Roes Setiyadi, Krakatau Steel’s president director said as quoted by Kontan.

Muljono said, as quoted by Kontan, KNSS has yet to export its products and will sell all to Indonesia’s domestic market due to high demand.

The plant currently operates at half capacity of 200,000 mt but it’s expected to reach full capacity in near future.

“(We’re) not exporting yet because each region has similar plants,” Muljono said, adding that KNSS products only suitable for automotive sector, specifically, for making car’s body.
Separately, Bisnis Indonesia reported, investment for the KNSS project reached US$300 million.

For raw material, the plant still relies on imports. According to Bisnis Indonesia, there will be three scheme for supplying raw material. First, raw material can be brought in from Nippon Steel’s plants in Japan. Second option, PT Krakatau Steel processes crude steel first, and then shipped to KNSS. And third, KNSS’s raw material supplied by PT Krakatau Steel.

The company has received purchase commitment from a number of automotive sole agents the Indonesian-language daily said. But Bisnis didn’t give details on the commitment volume nor the value.