PT Krakatau Steel, Indonesia’s state owned steel producer, is currently scouting the domestic market to buy an ailing steel maker in the domestic market as part of its plan to boost its production, according to an executive of the company.
“We cannot disclose the name of the acquisition target as we are still in the negotitation process (with the potential target) and have to deal with a third party,” Silmy Karim, chief executive offer and president director of PT Krakatau Steel told Steelmint on Thursday (6th Dec).
Karim said that acquisition target company was estimated to have a total output of more than 900,000 MTPA. He did not provide any other details including the fund to finance the acquisition.
Meanwhile the acquisition was also intended to help safeguard the Indonesia’s steel maker industry that have been struggling over the past years due to various reasons including a global economic rout and trade war.
Krakatau Steel currently has a total production of 5 MnT of steel per year. If the acquisition materialize next year, it would lift Krakatau Steel’s production.
Further he added that the company was also building new plant. “An unorganic growth and organic growth should go in tandem,” Karim said in terms of company’s strategy.
Moreover the company was currently building a hot strip mill (HSM) plant, which is expected to come on stream in April next year. The plant is currently at almost 90 % completed, according to Katadata, a local newspaper. The new plant is expected to have a total production capacity of 1.5 MnT of steel. In turn, the new plant will lift PT Krakatau Steel’s total production capacity to 6.5 MnT next year.
Krakatau Steel is still in dire financial strait as it still reported a total net loss of $16 million in the first six months this year from a loss $56.7 million in the corresponding year last year.
The company booked a total net revenue of $854.3 million in the first half this year, an increase of 35% from year earlier.
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