JAKARTA: Publicly listed state-owned steelmaker PT Krakatau Steel has revealed that state asset fund Danantara was stepping in as the main investor for a new steel plant set to break ground in March this year, signaling a U-turn from a potential joint partnership with a Chinese investor.
Hernowo, Krakatau Steel’s commercial, business development and portfolio director, said the company was originally eyeing potential investment from China to shore up its weak financial capacity.
However, Danantara’s entry meant the company no longer needed to seek other investors to serve as the project’s primary funder.
“Now the considerations have changed. Danantara plans to come in. If Danantara enters the project, there will be no need for other investors.
“Partnerships with other countries will still be allowed, but control remains in Indonesia,” he said .
The country’s largest steel producer previously explored a partnership with China’s Delong Steel Group to build a steel plant, projected to have an annual capacity of three million tonnes, on a 500 ha plot in the Krakatau Industrial Estate Cilegon (KIEC) in Banten.
The potential investment from Delong Steel Group, one of the world’s largest steelmakers, aimed at increasing production volume and providing technology transfers through the development of so-called green steel.
“China was the top priority investor. Technological cooperation may come from China or South Korea as it does today, but they won’t be the majority investor,” Hernowo added.
Krakatau Steel’s planned upstream iron and steel plant, he said, was part of the government’s broader downstream mining agenda to process raw minerals such as iron ore and iron sand into higher-value products like carbon steel.
Danantara previously announced that the steel production facility was set for groundbreaking in March.
In a meeting last Wednesday with House of Representatives Commission VI, which oversees trade and state-owned companies, Danantara chief operating officer Dony Oskaria said upstream capacity building was a key priority in curbing steel imports.
Home to the world’s largest nickel reserves, Indonesia has emerged as a major global exporter of stainless steel products following its 2020 export ban on nickel ore, which was imposed as part of a broader downstream policy aimed at boosting domestic processing and investment.
However, Deputy Industry Minister Faisol Riza said in November that the national steel industry was currently operating at only around 50% capacity amid weak global demand and an influx of cheaper imports from China.
In December, Krakatau Steel secured a US$295mil shareholder loan from Danantara to bolster working capital and support a restructuring plan that includes restarting key production facilities this year.
The funding comes as the company continues to operate well below capacity, ever since a fire in 2023 damaged and disrupted production at a hot strip mill, one of its core facilities.
Krakatau Steel aims to resume operations at its hot strip mill at a monthly capacity of 120,000 tonnes and at its cold rolling mill at 50,000 tonnes starting in 2026, according to a company disclosure. — The Jakarta Post/ANN
