China's Baowu, Indonesia's Krakatau Steel ink MoU on steelmaking

Indonesia's PT Krakatau Steel (Persero) Tbk (PTKS), the leading state-owned steelmaker, signed a Memorandum of Understanding (MoU) on October 16 with Zhongnan Iron and Steel Co., a subsidiary of the world's top steelmaker, China Baowu Steel Group (Baowu), to strengthen cooperation on steelmaking.

The agreement was signed earlier on Monday at the Indonesia-China Business Forum held in Beijing, with the focus being on restarting PTKS's upstream iron- and steelmaking facilities, according to Purwono Widodo, chair of Krakatau Steel.

The Indonesian steelmaker's new blast furnace, built by a consortium of PT Krakatau Engineering and China's metallurgical engineering giant MCC CERI, was still undergoing trials when it was stopped in December 2019 when the high cost of operating the unit made it uneconomic in prevailing steel market conditions.

The reactivation will be divided into several phases, with the first phase being to upgrade a wire rod mill, the second to construct a new basic oxygen furnace and a billet casting facility with a capacity of 1.5 million tonnes/year, and the third phase to resume work to complete the blast furnace, Mysteel Global understands.

The investment required for the period is expected to reach $1.2 billion (Yuan 8.77 billion), equivalent to 18.87 trillion rupiah, according to Widodo, adding that the capacity will increase to 4 million tonnes/year in the future.

Baowu Group Zhongnan and Krakatau Steel had previously signed a preliminary agreement on steelmaking in late November 2022, while the new MoU will strengthen their cooperation, Mysteel Global noted.

Located in Cilegon-Banten in west Java, Krakatau Steel had a steelmaking capacity of 4 million t/y as at end of 2022, with its flagship products including hot and cold rolled coils and wire rod, Mysteel Global learned from the company's profile.

Written by Carly Chen, chenziyi@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.