Krakatau Steel, Semen Indonesia Set Up Joint Venture Company

Jakarta, June 10 (Antara) - PT Krakatau Steel Tbk. and PT Semen Indonesia Tbk. set up a joint venture company that will produce slag powder which is a special cement raw material made from iron and steel wastes with an investment worth Rp310 billion. "The construction of the plant will be done in July and it is expected to operate at the end of 2014," Krakatau Steel`s president director Irvan Kamal Hakim said after signing the memorandum of understanding for the cooperation with the president director of PT Semen Indonesia, Dwi Sutjipto, on board a Portlink ferry serving Lampung`s Merak port and Bakauheni in Banten province here on Monday. Irvan said preparations for the construction of the plant are still being made on a 5-hectare land belonging to PT Krakatau Steel in Cilegon, Banten. He said the raw material would come from slag and side products of blast furnace and tar processing facilities reaching 750,000 tons a year in PT Krakatau Steel and PT Krakatau Posco. "The capacity of special cement production of PT Semen Indonesia would later reach around 750,000 tons a year," he said. He explained that the feasibility study on the slag powder plant had already finished leaving only an establishment of a subsidiary company. PT Krakatau Steel and Semen Indonesia also involved PT Banten Global Development (BGD) which is a Banten regional government-owned company in the effort. "The composition of funding is 45:45:10 with Krakatau Steel and Semen Indonesia each holding 45 percent and BGD 10 percent," he said. He said total investments from the three companies were based on the proportion of their shares. Krakatau Steel`s funding meanwhile would reach around Rp139.5 billion and it has been made available from the company`s capital expenditure reaching around Rp8 trillion this year. He said the investment cooperation was part of the company`s plan to boost contribution from its non-steel businesses to the company`s revenue up to 30 percent in the next five years` time from currently only 10 percent. The increase from non-steel sectors include from infrastructure, waste management, property, industrial estate, energy and power generation. PT Semen Indonesia president director Dwi Sutjipto meanwhile said the development of the slag powder plant was part of the company`s diversification efforts to increase its production capacity. "In line with the effort to increase cement production capacity slag supply guarantee is needed. This slag cement is stronger than common cement especially important for construction projects as it has stronger resilience against sea water," he said. State enterprises minister Dahlan Iskan hailed the cooperation as a mutually beneficial cooperation. On one hand Krakatau Steel could increase its income while on the other Semen Indonesia could expand its production and strengthen its position as the biggest cement producer in Southeast Asia.