Indonesia's Delta Prima Steel Plans to Resume Sponge Iron Production in Middle 2018

Indonesia one of the emerging steel producer of south east Asian region has produced around 8 MnT of crude steel in CY'17. Majorly Indonesian steel producers uses domestic or imported scrap as a raw materials. Very few producers produce steel from sponge iron.

PT Delta Prima Steel, an Indonesian sponge iron producer, expects to resume production in the middle of this year after it has been idle for a year due to lack of iron ore, Haykel Hubeis, the company's director said in a recent interview.

An iron ore mine which supplies high-quality ore for PT Delta's plant in South Kalimantan province, was waiting for the Indonesia's Forestry Ministry to issue a permit to start production as the mine is located in the forest, Hubeis said.

"It's not easy to obtain the permit. It's a lengthy and complicated process," said Hubeis. The plant had operated for 1.5 years before it ceased production last year.

The company plans to produce around 25,000 tons this year and will ramp up its output by 5,000 tons in every four months, he said. Production is expected to reach around 50,000 tons by middle of next year, half its full capacity of 100,000 tons per month.

"We are preparing the mine, the plant and the market," said Haykel, adding that the company still aims to export the products to Bangladesh and Srilanka due to limited demand in the country's domestic market. The company is also seeking to start selling sponge iron to Cina, he said.

According to Haykel, Indonesian steel makers prefer to buy cheaper imported billet from China than buying sponge iron from the domestic producers and process the raw material into billet.

"We ask the government to impose more policy to tackle flows of cheaper billet from China," said Haykel, adding the current import duty on billet is insufficient.